Saving the Farm !

New limits have been imposed on foreign ownership of Australian farmland.  Previously, the cut-off point was $ 252 million before a foreign purchaser needed the approval of the Foreign Investment Review Board and now that has been reduced to just $ 15 million.   The Australian Taxation office has been ordered to "stocktake " the current foreign ownership position and report on the present situation.

Perhaps the most interesting aspect of this review is the fact that the new $ 15 million limit is cumulative.  The past $ 252 million applied to each purchase, hence a foreign buyer could accumulate any number of additional farm properties to acquire a large holding, provided each purchase did not exceed that $ 252 million price tag.   Now foreign holdings carry just a $ 15 million limit on a foreign investors entire ownership of land anywhere in Australia.

There is suspicion that this move is directed mainly at China, but many world countries are prudently trying to acquire overseas  agricultural land to safeguard future food supplies for their own citizens, but in the case of China we need to look further at land acquisition policies because of the closed nature of the Chinese form of government.

A centralised Communist government may try and get around our holding limit by using it's vast numbers to acquire ownership by individuals which fall under that $ 15 million cap, but which in reality become the property of the Chinese state because each purchase is really held in proxy by the nominated purchaser.

There is a danger that such a tactic could result in a piecemeal patchwork of farms rather than the broad acres style of farming which applies in the big agricultural nations that supply the world food supply.   Japan has a costly and inefficient farming situation because it's family farm lobby protects small holdings and high tariffs limit overseas competition.  A similar scenario exists in much of Europe - and it seems that feeding a growing and hungry world will fall to the lot of countries like America, Australia, Argentina and South Africa.

A century ago, farming was mainly a family affair and when sons grew up and married it was the custom to give them a piece of the farm, resulting in some farms eventually becoming too small and uneconomic.   Today, the need is for the expansion of farming land to allow the efficient use of costly machinery and to bring in the crop sizes needed to meet world demand.   The fragmentation of farms is the exact opposite of best farming practice and yet if we are not careful that is precisely what applying a low foreign ownership limit may create.

Perhaps we should be encouraging farm ownership to be in the hands of big public companies - in which foreign interests may invest money - but which remain Australian entities tasked with profitably producing food for the Australian and export markets.   The sticking point in many Australian minds is the concept that some foreigner may "own " the soil of Australia and dictate what will be grown on it - and where that product will end up.

There seems no doubt that food will be a future item of friction in world affairs and we would be well advised to plan for that future - now.   Keeping the ownership of Australian farms in Australian hands by placing reasonable limits on foreign ownership would have a high priority in most citizens minds.  The government should think long and hard to ensure that this objective is met !