FOREIGN ownership of farmland needs greater scrutiny, writes XAVIER DUFF

So the Federal Government has done a survey of foreign ownership of Australian farm land and found 89 per cent is Australian owned? Great, no problem then.

All that concern about foreign owners buying up large slabs of Australian farm land with the potential erosion of food security is apparently unfounded. Case closed. Or is it?

It would be naive to simply accept there is no problem with foreign purchases based on this survey - and shut down the debate over scrutiny of foreign ownership.

The problem is the Australian Bureau of Statistics survey has failed to hit the mark because it asked the wrong question.

A survey of 11,000 agribusinesses, a mere 7 per cent, provides only an estimate of how much land might be foreign-owned.

It's not an absolute measure, nor does it tell us a trend.

The real question is this: of all farm sales in the past decade how many have gone to overseas buyers?

This is the period when countries, particularly in the Middle East and China, began their spending sprees on farm land around the globe.

A forensic analysis of farm sales since 2002 would be much more revealing than a simple random survey of farms, many of which would not have changed hands in decades.

It would be easy enough to do a land titles search of farms that have changed hands and with the help of the companies register find the origins of the current title holders.

Of course, all that would be unnecessary if we had established years ago a requirement for foreign buyers to register their purchases - as many other countries require.

Unlike most other business investment there is virtually no scrutiny of overseas purchases of Australian farms.

Foreign Investment Review Board approval is not needed for purchases under $231 million, which would exclude about 99 per cent of Australian farms.

A single foreign investor could quietly fly under the FIRB radar gradually accumulating dozens of properties collectively worth much more than $231 million.

Many countries around the world have registers of farm land sales and rigorous approvals processes.

The US Foreign Agricultural Foreign Investment Disclosure Act requires details of all foreign purchases of farm land to be notified and registered.

Interestingly, approvals and controls over the purchases are then left up to the states and many, such as Missouri, Iowa and Indiana, specifically forbid foreign individuals and companies from owning farm land.

In Manitoba, Canada, tight restrictions apply to foreign ownership and in Saskatchewan it is virtually impossible for non-citizens to own farm land.

China itself prohibits private foreign ownership of farm land as does the Philippines.

Tight restrictions exist in many other countries such as Ireland, Iceland, Russia, Japan, Argentina and Brazil.

New Zealand has taken a particularly hard line approach.

All foreign purchases over 5ha must now be approved by the NZ Government, which applies a national economic interest test.

The most recent case to come under scrutiny is a parcel of 16 dairy farms the Chinese want to buy.

One Hong Kong bid was knocked back last year and since then two of the individuals associated with the bid have been charged with corruption offences.

In Australia the sale would have gone through secretly, no questions asked.

Those who want the status quo argue a register and an approvals process would block much-needed foreign investment in agriculture. This is nonsense.

The point is not all investment is necessarily good. You only need to look at the managed investment scheme debacle to know that.

An approvals process is a debate we need to have, but for now, at the very least, a national register of foreign farm purchases is paramount.

There is an old adage in management that says you can't manage what you don't measure. The Government should take heed.

  • Xavier Duff is a senior reporter with The Weekly Times