China scales back WA farm plans

A Chinese agricultural conglomerate has scaled back investment plans for WA's grain industry but still hopes to finalise the purchase of more farms.

The Beidahuang Group has been dismayed by what it regards as negative media coverage of its investment in agricultural land.

It is also dealing with an inquiry from the Foreign Investment Review Board, believed to have been sparked by a series of exclusive reports in The West Australian last November. When asked about the inquiry, Treasury said it did not comment on specific foreign investment cases.

Heilongjiang Feng Agricultural, an arm of Beidahuang, paid $52 million for 30,000ha over a four-week period late last year and was poised to buy more prime farm land as part of a strategic spending spree.

The buy-up was linked to plans to set up an independent grain supply chain to China through loading facilities at the port of Albany.

Revelations about the potential scale of the project caused a backlash from opponents of foreign investment in agricultural land despite support from the State Government and key farming groups.

HFA has asked why similar WA farm purchases by US investors and the Qatar Government did not attract the same level of scrutiny and criticism.

It is understood Australian contractors will plant crops on the HFA farms - near Ongerup and Lake Varley - this year with all capital sourced from local suppliers.

HFA paid a company controlled by high-profile farmer David Webster $23.2 million for the Ongerup farms and $29 million for the Lake Varley farms after companies controlled by prominent WA grain grower Dennis Joyce collapsed.

Opposition Leader Mark McGowan has pledged to set up a parliamentary committee to scrutinise foreign investment in agriculture if he wins the State election.

Prime Minister Julia Gillard announced plans for a national foreign ownership register for agricultural land last October as debate raged over the issue.

Ms Gillard said just 0.1 per cent of total direct foreign investment in Australia was in agriculture, forestry and fishing, 89 per cent of agricultural land was entirely Australian-owned and another 6 per cent was majority Australian-owned.

Treasury is assessing 32 public submissions on the foreign ownership register and will consult key stakeholders before reporting its findings to the Federal Government.

China is emerging as a growing market for WA grain irrespective of the foreign ownership debate.

In a statement posted on the central government website last month, Chinese Agriculture Minister Han Changfu said the country faced a shortage in grain supply because demand continued to rise. Mr Han said China was a net importer of rice, wheat and corn in 2012 and faced a "very difficult task" balancing demand and supply.