Food sovereignty

NSW Farmers Association President Fiona Simson was a guest speaker at the IV Global Access Partners National Economic Review: Australia’s Annual Growth Summit on Friday 20 September 2013. She explored the discussion around food sovereignty and foreign ownership of agricultural land.

At last month’s Rooty Hill debate between Mr Rudd and our new Prime Minister Tony Abbott, a comment made by Janine, a grandmother from Sydney’s west created a media storm and set talkback radio alight. She said “We should not sell our land, we should keep our land to the Australian people.”

I may be alone but I don’t think the fall-out from Janine’s comments has been such a bad thing.

She is after all a person, a consumer, who eats food and who needs to be (like farmers) considered when it comes to the direction and decisions we make about food systems and policies.

Many in the press used Janine’s comments to illustrate Rudd and Abbott’s move to sidle up to voters’  fears about foreign investment.

For me, it was an important sign that consumers in Sydney’s west  (like many other suburbs around the nation) care about food sovereignty – who actually owns the food, who actually owns our capability of production, and puts the needs and interests of those who produce and consume food at the heart of agricultural systems and policies. Food security is all about having enough to eat. Food sovereignty, on the other hand, is about power and control.

In my view Janine asked the question that no one else dared to ask, and her comments helped to bring out into the open a discussion and debate that we as a community have to have.

It is important to note that Janine’s concerns are not only held in Rooty Hill, and Sydney’s west, but also illustrated in the Lowey Institute’s 2012 national survey about public opinion and foreign policy.

The survey revealed that 81 percent of Australians are against the Australian Government allowing foreign companies to buy Australian farmland to grow crops or farm livestock. It would seem that we can no longer assume that it is only “rednecks” or the poorly educated that have a strong view about this issue, and that now there are many well educated people and even those who are economically savvy who think we need to have another look at the way we “do” foreign investment in Australia, and have concerns about our long term food sovereignty.

Foreign investment is a complex issue and in my view that it is a very good thing for our nation that so many people in our community are engaging in this debate.  We must encourage it. In my view grassroots engagement and input is critical when it comes to making the big calls on policies affecting our farmers and our agriculture industry.

Grassroots views may not always be palatable for many in Canberra or Macquarie Street outside election time, but what value does public policy have if it fails to take into consideration what communities want and need?

Many of you I am sure assume that grassroots farmers as a collective are just like Janine but with overalls and gumboots on.

Like all sections of our broad community some definitely would agree with her statement that we should keep our land to ourselves.

But many, like perhaps you and me, also recognize that our nation and our industry needs foreign investment if we are to embrace the challenges of competitive markets and build our nation’s future. Many see a difference between foreign investment and  foreign control.  Many might ask how can we allow foreign investment into our country without letting overseas corporations and market institutions dominate our local food system?

This is just one of the tough policy decisions that the new federal government is going to have to wrestle with in the coming months.

The community and indeed the media want to caste the issue in a pro or anti foreign ownership light.

But foreign investment and food sovereignty are intrinsically linked, and the question is much more complex than that.

Do we want foreign companies to just invest in our economy or do we want them to support our regional towns, local employment and Australian families? Can we structure it in such a way so as to address concerns about food sovereignty, yet benefit from the investment?

What do we actually mean by protecting our national interest – and does the community’s expectation align with the government’s? How much control and influence do we want foreign companies to have over Australia’s natural assets and strategic infrastructure

Put simply, how do we make it happen and not put key strategic assets at sovereign risk?

I guess first of all we must ask is anything sacred? Do we have key strategic assets? I don’t think anyone would doubt that we do.

But what are they and how do we define them? That is a very important question which we need to ask the Australian community.

Grain farmers in NSW would put eastern seaboard ports and grain silos at the top of their list. The proposed purchase of Graincorp by multinational Archer Daniel Midlands is one of the first decisions new Treasurer Joe Hockey will be asked to make. What happens if we do hand over control of our ports, our infrastructure, our grain silos, in fact what amounts to basically our entire east coast grain supply chain to a foreign entity? And what about our water licenses, or our most fertile land? What if that entity is a foreign government? Does that change what you think and should there be different rules in place?

Clearly the community doesn’t currently have faith in the process. There is no argument from me that we need investment in our industry, both from overseas and local to grow our industry. If we can get it right,  then Australian agriculture stands to gain from the huge forecast increase in population.

To cope, global agricultural production must increase seventy (70) percent by 2050.

This translates to an additional point seven ($0.7) to one point seven ($1.7) trillion dollars in agricultural exports between now and 2050.

To meet the forecast in agricultural exports needed, we will require about six hundred ($600) billion dollars in additional capital. Unfortunately this cannot come from domestic sources alone.

According to the OECD regulatory restrictiveness index which measures statutory restrictions on foreign direct investment in 55 countries – Australia is the 17th most restrictive country.

We are behind China, Indonesia, Canada and NZ but ahead of the US, UK and Argentina.

New Zealand requires any purchase of agricultural land over 5 hectares to be subject to the provisions of the Overseas Investment Act. It also has a well established set of criteria any foreign investment must be assessed against.

In the US it is compulsory for all foreign persons who acquire or transfer an interest in agricultural land to report that transaction within 90 days.

The US Federal Government does not restrict ownership of farmland by foreigners. But about half of the individual states in the US do have some form of restrictions including forbidding foreign entities owning farmland.

Canada has a foreign investment review process similar to Australia which ensures foreign investment is of net benefit to Canada with a review of transactions above a threshold. Some Canadian states also have their own restrictions on purchasing agricultural land.

At the moment, Australia’s agricultural exports are dominated by unprocessed wool and grains with strong demand for some of our processed meat.

It is in this area of value adding that we will need foreign investment to fully realise the opportunities of the global increase in food demand.

I don’t think it is unreasonable that investors in Australia have to meet a national interest test. Currently, however, the Foreign Investment Review Board operates under a mantle of secrecy, applying a national interest test to investments in agricultural land of over $248 million in an individual transaction. The national interest test is a vague proposition that in the words of FIRB themselves take into account national security, competition, other government policies, impact on the economy and character of the investor. There appear to be no benchmarks or thresholds on which decisions are made. FIRB decisions are not made public except in high profile cases, and has no power to enforce any conditions it might apply. No wonder the community has such little faith!

Nor do I think it is unreasonable for us to have a national register which enables our community to understand the level of foreign investment we have. Currently, these results are only available  through individual title searches or ABARES data several years old. There is no way that this could capture cumulative purchases, or enable the community to be involved in a strategic way.

I also think the community expects a different standard to apply when our purchases involve a foreign government entity, and also when they seek to change the nature or land use of their purchase – for example from agricultural land to an open cut coal mine such as in the Caroona area in the north west of the state. Clearly this change of landuse would result in a change to the food production capability of that land. On it’s own it’s probably not an issue, but is anyone counting or keeping a tally of the reduction in food producing capability? Or should we be? Certainly it appears that other countries are ….

If foreign ownership is not necessarily the answer, can we practically support foreign investment?

This is where we might need to think outside the square.

A Chinese company recently leased 13,400 hectares of farmland in the Ord River area in WA. The company (Kimberley Agricultural Investment) plans to invest more than $700m to create agricultural land and to develop export industries in the region.

The land is being leased to the company for terms ranging from 10 to 50 years with options for a 25-year extension, subject to performance.

KAI is required to meet development milestones, including achieving active irrigated agriculture and implementing an agreed Aboriginal development package.

This may be a great model to replicate. The lease arrangements allow for the investment without the ownership, and cover off on concerns about long term power and control.

The level of interest by foreign companies in Australia is a credit to our country.

We are obviously producing some of the world’s best produce and products in one of the best operating environments to attract their interest.

It would be great if Australian investors saw the same opportunity in agriculture instead of focussing on concerns about lack of short term returns and the high risk due to the impact of international markets.

But that is their loss. It may take foreign companies to ignite the excitement in agriculture at the domestic level. It will also take strategic policy from a government with vision and commitment to sustainability, growth and certainty of our local agricultural industry and an eye to food security and food sovereignty. We hope we might now have that government in place.

It seems timely that the UN’s 2013 Trade and Environment Review has only recently been released.  It calls on Governments to wake up before it is too late and shift towards local production models. Although aimed primarily at developing countries, there’s a message here for us as well.

I certainly recognise that an Australia without foreign investment will not deliver the country that we want to hand over tomorrow to our young farmers and our young people. But I also believe the way we manage that investment is critical if we are to cover off on concerns about food sovereignty, and maintain our local food security into the future.

“Agriculture not only gives riches to a nation, but the only riches she can call her own” – Samuel Johnson

0 Comments

1. 

   murphy_8552

   April 27, 2014 at 9:42 am

   It would be great if

   It would be great if Australian investors saw the same opportunity in agriculture instead of focussing on concerns about lack of short term returns and the high risk due to the impact of international markets.I love reading through an article that can make men and women think. Also, thanks for allowing for me to comment!