Decade in review: Foreign investment wave hits farming

More than any period in recent generations, overseas spenders have targeted Australia's farms, farm products and the farm services sectors with new-found zeal.

A steady run of bullish export returns, notably from meat, dairy, wine, horticultural and fibre products, and surging farmland values, have combined with a flush of fresh capital from the northern hemisphere looking for investment diversification to lure big spenders into agriculture.

"It's been a watershed decade for new investment attitudes and activity - probably the biggest period of change in the market in five decades," said agricultural investment fund principal, David Bryant at Rural Funds Management.

"The availability of money from institutional investors and pension funds is now far better organised and they're far more aware of agriculture here than they've probably ever been."

He noted how real assets had emerged as a new investor asset class to accommodate agricultural land investment, enabling the advance of North American and European pension funds into Australian farmland and supply chain businesses.

At the same time, the market saw a surge in local and overseas-backed corporate farming aggregations, and more local producers leasing foreign-owned farms to increase their own output.

Australia's agricultural capacity attracted intense new interest from Asia, particularly as China rapidly emerged as a hungry, cashed-up food consumer and our biggest farm export buyer, leaping from absorbing $4 billion in sales in 2010 to more than $12b last financial year.

Purchases and partnerships involving Chinese companies and wealthy individuals started modestly, but grew fast.

In 2012 the 93,000-hectare cotton giant, Cubbie Station, on the Queensland-NSW border hit the headlines when bought for $232 million by Chinese-Japanese textile partnership Shandong RuYi with 20pc local partner, Lempriere Group.

A few months later Kimberley Agricultural Investment, owned by Shanghai Zhongfu, leased an initial 13,400ha of Top End Crown land for up to 50 years to build a $250m sugar mill and grow cane.

By 2015 Chinese investors were really busy, estimated to be buying sizeable beef properties almost fortnightly, including the 705,700ha Gulf stations Wollogorang and Wentworth for $47m, Glenrock Station (30,868ha) in NSW's Hunter Valley, and Woodlands (31,000ha) at St George, Qld, for $28m.

In 2017 Hong Kong's Hui family paid $100m-plus for 51pc of NSW meat processor, lot feeder and marketer, Bindaree Beef - one of many abattoirs sold to Chinese.

China's thirst for healthy, western-style protein also sparked an obsession with milk factories and dairy cows, including Australia's biggest dairy farm company, Van Diemen's Land, bought by Moon Lake Investments for $280m in 2015.

Inner Mongolia's Mengniu Dairy bought 79pc of Victoria's, Burra Foods, in 2016, then in 2019 paid $1.5b for the Bellamy's Organic and $600m for Lion's dairy division.

China has grown into Australia's second biggest agricultural landholder with 9.1m hectares or 2.3 per cent of our total farmland.

That's slightly behind long-time leader Britain, with 2.6pc, and well ahead of the US with 0.7pc, according to 2018's national farmland register of foreign ownership.

In total 13.4pc of Australian farmland (52.6m ha) had some level of foreign ownership interest.

NSW had 2213 properties with offshore investor involvement, or 13.6pc of the state's total farms, ahead of Victoria with 1889 (9.4pc).

"Agriculture today is very much a global product, and Australian agriculture is very much part of that global market in some way," said Sydney rural property specialist, Chris Meares, at Meares and Associates.

About 20pc of his firm's business now involved overseas investors.

"Asset allocators now regard agribusiness as a bona-fide asset class, and many look to Australia with long term investment horizons," he said.

"I think agriculture's attitude to overseas ownership is also more mature, with greater recognition of foreign investment as a good thing.

"You can certainly argue the US investment model of buying land and leasing gives farmers access to more country without having to find all the capital they'd require to buy their own place."

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Yet, Australian Farm Institute executive director, Richard Heath, still doubted if most farmers actively believed Australia needed more foreign investment.

"The figures suggest capital from overseas has been very important, but the commentary is taking its time to be accepted."

He noted there had actually been no real increase in farmland in foreign hands since 2015, despite the buying activity of late.

More obvious was foreign investment spreading through the supply chain and into conventional family farming districts.

"Regardless of whether they're owned by overseas entities or Australians, corporate farms look and feel different these days," he said.

Rabobank analyst, Wes Lefroy, said overseas owned investments also looked more significant in NSW, Victoria and SA, than they were in value terms.

Foreigners held just 7pc our farmland by value.

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