Farm Weekly | 11 May 2012
by BOBBIE HINKLEY
CORPORATE Agriculture Australia managing director Gordon Verrall believes WA farmers have nothing to worry about in regards to foreign investment.
Corporate Agriculture Australia is a management company which specialises in the sourcing and the full management of Australian farm properties for overseas and national corporate clients.
Mr Verall believes foreign companies investing in WA farmland will continue to operate "under the radar" just like any local farmer who takes on new land.
Mr Verrall disputed that there had been more foreign investment in WA farmland in recent years than ever before and suggested a fresh and "coincidental" spate of land settlements (including recent purchases at Jerramungup, Bindi Bindi and Esperance by a Qatar-based company's local arm Hassad Australia) had contributed significantly to local hype surrounding internationally-based purchases.
He said new purchases by the Malaysia Group at Northampton and the "ongoing rumour mill" of Chinese activity in the Great Southern also had local and well-established growers talking.
"There won't be too many big projects like we've just seen from Hassad in the future," Mr Verrall said.
"Most foreign investment will be by individual investors or smaller groups interested in picking up a farm or two.
"I don't know how much WA farmland falls under the corporate agriculture or foreign investment banner because that information isn't really there."
In terms of establishing a public register to keep track of who is buying and selling, Mr Verrall said he understood farmers calling for a register for foreign ownership.
He recognised it would be beneficial and said because there were a large number of scaremongers within the industry the current lack of statistical support to demonstrate how little land was actually owned by overseas investors meant those scaremongers got some unjustified credence.
Though whole-heartedly in support of foreign investment, when asked about the pros and cons of the process Mr Verrall was also sympathetic towards those farmers who had legitimate concerns about the possibility of profit being driven offshore and the bypassing of WA logistical chains.
He said while financial and social contributions to small communities and the underpinning of local land values were certainly positive aspects, foreign investors would never have the financial clout to bypass systems like CBH.
"Not that long ago AWB did a financial costing of putting its own storage and receival system in WA," he said.
"My understanding is that report showed it was only marginally viable and at the end of the day, wasn't worth it.
"AWB were talking massive tonnages compared to what the average corporate grower could ever grow.
"A foreign investor would need to grow at least half a million tonnes to make their own port facilities worthwhile and even though companies like Hassad Australia would have the financial clout to do it the business model just wouldn't add up."
Mr Verrall also acknowledged the Chinese interest in the Ord region and the on-going presence of English and American enterprises scattered throughout the length and width of the State.
He said unlike many overseas investors, English landholders will "pretty much buy anywhere."
Last year Corporate Agriculture Australia began its work with the medium risk English investment fund JTP Capital to secure lower-priced hectares in the northern reaches of the Wheatbelt.
Mr Verrall confirmed JTP was still in the market for a suitable landholding and revealed Corporate Agriculture Australia was also in talks with a Swiss group looking for one or two strategically placed broadacre farms in WA.
"They're just interested in putting five or 10 million dollars out of shares or equities into a solid asset of a different class," he said.
"There are two ways to look at the foreign investment debate.
"Economically and financially the two regions which make the most sense are the Geraldton and Esperance port zones for scale, production and land values.
"Having said that, you would assume the bulk of investment would be in these regions but that's not the case because other parameters, like distance, come into play.
"We're also dealing with an Asian group at the moment that has a problem with distance.
"It doesn't like the isolation of the big, open, broadacre scale so even though the economics of being further away work a lot better that particular company will eventually invest closer to the Perth CBD."
Mr Verrall said he felt most WA farmers were supportive of the foreign investment and corporate agriculture concept but were scared of large investment groups who were rumoured to have plans to buy land and import all its fertiliser, labour and machinery needs.
"That idea scares me," he said.
"And it simply shouldn't happen."
WAFarmers president and Badgingarra farmer Dale Park also called for a register to be created for foreign interests taking part in WA agriculture.
He said the fact nobody had any idea about "what was going on" was the root of the entire problem.
Mr Park recently took part in talks with Agriculture and Food Minister Terry Redman where the pair agreed that the entire agricultural industry continued to battle for information.
"The only State which has any idea about foreign investment is Queensland and that's because it keeps a register," Mr Park said.
"And until we actually know what we're dealing with as an industry debating in a fact-free arena is bit of a pointless exercise."
Mr Park also claimed to be one of the very few farmers in WA who knows he farms alongside a Chinese-backed neighbour.
"The reality is foreign investors own one or two small farms which are farmed just like any other," he said.
"Foreign investors have to adhere to our taxation, workplace and immigration laws but all those things tend to be forgotten in the heat of the debate."
Pastoralists and Graziers Association (PGA) president Rob Gillam also didn't have a problem with foreign investment.
He echoed Mr Park's enthusiasm for a national register and said it didn't matter which countries elected to invest in Australian dirt.
"We have got to meet the new world," Mr Gillam said.
"It was more than 40 years ago that Britain cast us adrift in many ways when it decided to go with the European economic market.
"It doesn't matter whether we talk about dairy, sheep, meats or any sort of products, Australia suffered for many years."
Mr Gillam said if overseas investors didn't make sufficient returns after a certain period of time they would more than likely start to offload some of their investment, just like any other grower.
"I would be very surprised if we didn't see Australians running the above properties," he said.
"They will perform under their new masters and attempt to run the industry right.
"And let's face it, they might come up with some ideas we haven't thought of yet."
Executive manager of business banking at Suncorp Bank, Dean Armitage also shared some perspective on foreign investment.
He said while Suncorp had witnessed a lot of inquiry about vacant broadacre farm land not many sales had been transacted in recent times.
While the sale of wineries to foreign interests had been prevalent in recent months he believed foreign investment throughout the agribusiness sector was a good source of capital funding.
He said about 11 per cent of agribusiness enterprises had some form of foreign ownership in Australia (5.8pc of them with the majority foreign owned and 5.5pc with the minority foreign owned).
He said of that only about one per cent were operating businesses, the rest tended to be businesses which purchased land to lease out.
"That percentage hasn't really changed since the mid-1980s," Mr Armitage said.
"There is now more Chinese and German ownership and less owned by the US and other Euro countries."
Mr Armitage said given Australia's production capacity there was no need to be concerned about foreign ownership.
"Of a bigger concern to us is the loss of productive land to competing interests like mining and trees," he said.
In a bid to understand the views of agriculture's younger generation on the foreign ownership of land, Agriculture and Food Minister Terry Redman has enlisted the help of the Y Zone Advisory Group.
The Y Zone is an industry stakeholder group of young farming and agri-professionals fostered by the Rural Business Development Corporation (RBDC) to develop strategic responses from young people in agriculture and ensure government has the information it needs to plan for the industy's future. To have your say complete the Y Zone survey via the group's Facebook page.
Wagin farmer Phillip Ward would like to see more emphasis put on family farming in the near future.
by BOBBIE HINKLEY
CORPORATE Agriculture Australia managing director Gordon Verrall believes WA farmers have nothing to worry about in regards to foreign investment.
Corporate Agriculture Australia is a management company which specialises in the sourcing and the full management of Australian farm properties for overseas and national corporate clients.
Mr Verall believes foreign companies investing in WA farmland will continue to operate "under the radar" just like any local farmer who takes on new land.
Mr Verrall disputed that there had been more foreign investment in WA farmland in recent years than ever before and suggested a fresh and "coincidental" spate of land settlements (including recent purchases at Jerramungup, Bindi Bindi and Esperance by a Qatar-based company's local arm Hassad Australia) had contributed significantly to local hype surrounding internationally-based purchases.
He said new purchases by the Malaysia Group at Northampton and the "ongoing rumour mill" of Chinese activity in the Great Southern also had local and well-established growers talking.
"There won't be too many big projects like we've just seen from Hassad in the future," Mr Verrall said.
"Most foreign investment will be by individual investors or smaller groups interested in picking up a farm or two.
"I don't know how much WA farmland falls under the corporate agriculture or foreign investment banner because that information isn't really there."
In terms of establishing a public register to keep track of who is buying and selling, Mr Verrall said he understood farmers calling for a register for foreign ownership.
He recognised it would be beneficial and said because there were a large number of scaremongers within the industry the current lack of statistical support to demonstrate how little land was actually owned by overseas investors meant those scaremongers got some unjustified credence.
Though whole-heartedly in support of foreign investment, when asked about the pros and cons of the process Mr Verrall was also sympathetic towards those farmers who had legitimate concerns about the possibility of profit being driven offshore and the bypassing of WA logistical chains.
He said while financial and social contributions to small communities and the underpinning of local land values were certainly positive aspects, foreign investors would never have the financial clout to bypass systems like CBH.
"Not that long ago AWB did a financial costing of putting its own storage and receival system in WA," he said.
"My understanding is that report showed it was only marginally viable and at the end of the day, wasn't worth it.
"AWB were talking massive tonnages compared to what the average corporate grower could ever grow.
"A foreign investor would need to grow at least half a million tonnes to make their own port facilities worthwhile and even though companies like Hassad Australia would have the financial clout to do it the business model just wouldn't add up."
Mr Verrall also acknowledged the Chinese interest in the Ord region and the on-going presence of English and American enterprises scattered throughout the length and width of the State.
He said unlike many overseas investors, English landholders will "pretty much buy anywhere."
Last year Corporate Agriculture Australia began its work with the medium risk English investment fund JTP Capital to secure lower-priced hectares in the northern reaches of the Wheatbelt.
Mr Verrall confirmed JTP was still in the market for a suitable landholding and revealed Corporate Agriculture Australia was also in talks with a Swiss group looking for one or two strategically placed broadacre farms in WA.
"They're just interested in putting five or 10 million dollars out of shares or equities into a solid asset of a different class," he said.
"There are two ways to look at the foreign investment debate.
"Economically and financially the two regions which make the most sense are the Geraldton and Esperance port zones for scale, production and land values.
"Having said that, you would assume the bulk of investment would be in these regions but that's not the case because other parameters, like distance, come into play.
"We're also dealing with an Asian group at the moment that has a problem with distance.
"It doesn't like the isolation of the big, open, broadacre scale so even though the economics of being further away work a lot better that particular company will eventually invest closer to the Perth CBD."
Mr Verrall said he felt most WA farmers were supportive of the foreign investment and corporate agriculture concept but were scared of large investment groups who were rumoured to have plans to buy land and import all its fertiliser, labour and machinery needs.
"That idea scares me," he said.
"And it simply shouldn't happen."
WAFarmers president and Badgingarra farmer Dale Park also called for a register to be created for foreign interests taking part in WA agriculture.
He said the fact nobody had any idea about "what was going on" was the root of the entire problem.
Mr Park recently took part in talks with Agriculture and Food Minister Terry Redman where the pair agreed that the entire agricultural industry continued to battle for information.
"The only State which has any idea about foreign investment is Queensland and that's because it keeps a register," Mr Park said.
"And until we actually know what we're dealing with as an industry debating in a fact-free arena is bit of a pointless exercise."
Mr Park also claimed to be one of the very few farmers in WA who knows he farms alongside a Chinese-backed neighbour.
"The reality is foreign investors own one or two small farms which are farmed just like any other," he said.
"Foreign investors have to adhere to our taxation, workplace and immigration laws but all those things tend to be forgotten in the heat of the debate."
Pastoralists and Graziers Association (PGA) president Rob Gillam also didn't have a problem with foreign investment.
He echoed Mr Park's enthusiasm for a national register and said it didn't matter which countries elected to invest in Australian dirt.
"We have got to meet the new world," Mr Gillam said.
"It was more than 40 years ago that Britain cast us adrift in many ways when it decided to go with the European economic market.
"It doesn't matter whether we talk about dairy, sheep, meats or any sort of products, Australia suffered for many years."
Mr Gillam said if overseas investors didn't make sufficient returns after a certain period of time they would more than likely start to offload some of their investment, just like any other grower.
"I would be very surprised if we didn't see Australians running the above properties," he said.
"They will perform under their new masters and attempt to run the industry right.
"And let's face it, they might come up with some ideas we haven't thought of yet."
Executive manager of business banking at Suncorp Bank, Dean Armitage also shared some perspective on foreign investment.
He said while Suncorp had witnessed a lot of inquiry about vacant broadacre farm land not many sales had been transacted in recent times.
While the sale of wineries to foreign interests had been prevalent in recent months he believed foreign investment throughout the agribusiness sector was a good source of capital funding.
He said about 11 per cent of agribusiness enterprises had some form of foreign ownership in Australia (5.8pc of them with the majority foreign owned and 5.5pc with the minority foreign owned).
He said of that only about one per cent were operating businesses, the rest tended to be businesses which purchased land to lease out.
"That percentage hasn't really changed since the mid-1980s," Mr Armitage said.
"There is now more Chinese and German ownership and less owned by the US and other Euro countries."
Mr Armitage said given Australia's production capacity there was no need to be concerned about foreign ownership.
"Of a bigger concern to us is the loss of productive land to competing interests like mining and trees," he said.
In a bid to understand the views of agriculture's younger generation on the foreign ownership of land, Agriculture and Food Minister Terry Redman has enlisted the help of the Y Zone Advisory Group.
The Y Zone is an industry stakeholder group of young farming and agri-professionals fostered by the Rural Business Development Corporation (RBDC) to develop strategic responses from young people in agriculture and ensure government has the information it needs to plan for the industy's future. To have your say complete the Y Zone survey via the group's Facebook page.
