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The inconvenient facts on food security

The food security issue has already blown up this year, courtesy of an ABARES report on Wednesday about levels of foreign ownership in agriculture.

The report drew a smattering of media coverage but the usual food security hysteria was missing because of the inconvenient reality check it delivered, that only 11.3% of Australian farmland was owned or partly owned by foreign companies.

That’s why the report drew claims of “whitewash” from the Nationals’ John Cobb, although he quickly insisted the “flimsy, rehashed” report wasn’t ABARES’s fault but Labor’s, naturally, and in particular no one in cabinet was from the bush.

And Bill Heffernan today was threatening to compel FIRB officials to attend hearings of his Rural Affairs committee on the issue. Normally, departments decide themselves which officials attend hearings.

The ABARES report in fact was a welcome corrective to a lot of the nonsense being peddled by politicians from various points of the political spectrum. That 11.3% figure was about the best thing going in it for the hysterics. And even it was misleading: the figure that’s both of wholly and partly foreign owned. Of that 11.3%, ABARES says, around half is majority Australian-owned. So, the amount of agricultural land outright controlled by foreign companies is less than 6%.

Not overly conducive to hysteria, is it?

The report also looked at FIRB data for 2009-10. FIRB data is problematic because it only captures foreign government investment applications or investment applications over $230 million, and doesn’t capture actual investment anyway. But that showed total foreign investment in agriculture and food manufacturing (including tobacco) at less than 4% of overall foreign investment.

And who are the biggest investors? The food security hysterics such as Barnaby Joyce like to portray the issue in terms best suited to the old Fu Manchu stories — it’s the sinister Chinese buying up our farm land. But in 2009-10, it was the US that was the source of the largest amount of investment applications across the economy generally and in agriculture (bear in mind US investors get special treatment under FIRB courtesy of the Howard government’s AUSFTA), followed by Malaysia, then the British. Chinese firms had no investment applications at all that year.

It gets worst for the “foreigners stealing our land” narrative: one of the key investors in agricultural land are foreign pension funds, rather than state-owned companies of Big Ag hell bent on controlling our food.

ABARES examined the issue of state-owned investments and what motivates them. What it offers should be read by every conspiracy theorist and food security advocate in the country.

But the suggestion that the purchase of farmland in a foreign country is an effective means of increasing the supply of food at home demands some analysis. Australia and many other world food suppliers have well-established and efficient marketing institutions for food exports, and bypassing these to make direct shipments from one or a few farms would be an expensive way to move produce abroad. To achieve economies in this process, and to have a significant impact on the food supply in the investing country, would require land purchases on a scale that vastly exceeds present levels. The cost would be extreme — purchasing food from the world market, even with the aid of government subsidies if required, is likely to be a significantly cheaper option. There is also considerable uncertainty as to whether such a strategy would be fiscally sustainable in the long term, if no consideration is given to profitability. For example, Cotula et al. (2009) conclude that evidence for the perception that China supports Chinese enterprises to acquire land abroad as part of a national food-security strategy is highly questionable.”

ABARES also notes that FIRB considers national security when assessing state-owned investment applications.

The best part of the report, though, is its succinct history of the role of foreign investment in agriculture — and the critical role foreign investment played in its development in Australia. It reels off example after example of the role of foreign investment since the earliest days of white settlement, including the establishment of entire industries like cotton.

In criticising the report, Cobb complained that what was needed was a “forensic examination” of the issue and “real data about the levels of foreign ownership of farm land and agribusiness”. The problem is, ABARES’s report does indeed contain plenty of real data. It’s just, inconveniently, that they don’t suit the food security narrative.

12
  • 1
    Holden Back
    Posted Friday, 20 January 2012 at 12:50 pm | Permalink

    How dare you bring facts into such a debate!

  • 2
    Lord Barry Bonkton
    Posted Friday, 20 January 2012 at 1:24 pm | Permalink

    Waiting for S.B to come in with “Gillard ly ing labor govt. Blah blah blah , my tony will fix all this and kick out the chinese.

  • 3
    Watts Corey
    Posted Friday, 20 January 2012 at 2:03 pm | Permalink

    Just once it would be nice if someone actually looked up the definition of food security. According to the United National Food & Agriculture Organization ‘food security exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life’.

    Is Australia’s food security, then, under any kind of threat *even* if we to take the hyperbole at face value (which would be silly, but just for argument’s sake…)? Nope. Some communities within Australia certainly face food insecurity, e.g. some Aboriginal and/or remote communities, and some poorer suburbs perhaps, but that’s a whole other story. Now, the country’s food security *is* under long-term threat from unbridled climate change, rising oil and fertilizer prices, etc. But to acknowledge these genuine risks and problems would be too hard for many in the rural lobby. Far easier to make up a scary story that plays to Australians’ xenophobia.

  • 4
    davidk
    Posted Friday, 20 January 2012 at 2:32 pm | Permalink

    Our food security is under sovereign risk.

  • 5
    nami
    Posted Friday, 20 January 2012 at 3:04 pm | Permalink

    Nice article, thanks. Aside from the ownership of the agricultural land, the quality of food in the future will be the key. When you put super phosphate on the soil it contains 3 minerals. These minerals make plants grow well and even make them look nutritious, however the body needs many more minerals and vitamins to remain healthy and if it isn’t in the soil it isn’t going to be in the plant. So another interesting topic may be :Quality Food Security

  • 6
    nami
    Posted Friday, 20 January 2012 at 3:08 pm | Permalink

    Oh and agree with LBB, I can’t control my excitement waiting for S.B to add her logic to the debate

  • 7
    Matt Fisher
    Posted Friday, 20 January 2012 at 3:15 pm | Permalink

    Without agreeing or disagreeing that have a problem with
    foreign ownership of agricultural land and food security; two
    points of issue:

    Firstly, the salient question may be not only about the current rate of
    foreign ownership but also what current trends
    suggest about the future.

    Secondly, what counts as ‘agricultural land’? If all the vast tracts of
    cattle grazing land in inland Australia were taken out of the equation,
    perhaps the ‘proportion’ issue might look somewhat different.

  • 8
    Hugh (Charlie) McColl
    Posted Friday, 20 January 2012 at 4:08 pm | Permalink

    Matt Fisher, it would look pretty dodgy if the ‘equation’ was made to look better or different by removing Aboriginal land ( “vast tracts of cattle grazing land in inland Australia”). Most of the remaining cattle country is owned by some of Australia’s biggest agribusiness corporations. It wouldn’t pass unnoticed if even one of them was bought by a foreign, government-owned or controlled company. They might even be happy to put a nuclear waste dump on it.
    Now, would that (foreign) government need to be a signatory to the Nuclear Non-Proliferation Treaty or would it be the UN Refugee Convention? Or would they just have to be nicely turned out?

  • 9
    jaywhar
    Posted Friday, 20 January 2012 at 5:01 pm | Permalink

    if someone from the bush was in cabinet then the facts would be different!

  • 10
    AR
    Posted Friday, 20 January 2012 at 7:33 pm | Permalink

    It was not part of the remit but, for the ‘food security hysterics’, it’s fortunate that their bogan targets don’t know, and wouldn’t understand were it tattooed on their receding foreheads, that the vast majority of Oz agricultural output is exported - 70%+ of meat, wheat, 90% of rice (FFS, in ASIA!?!) and significant quantities of other foodstuffs.

  • 11
    Kevin Tyerman
    Posted Friday, 20 January 2012 at 8:33 pm | Permalink

    The report drew a smattering of media coverage but the usual food security hysteria was missing because of the inconvenient reality check it delivered, that only 11.3% of Australian farmland was owned or partly owned by foreign companies.”

    From virtualoceania.net, to use a rather naive perspective of what “only 11.3%” can mean:
    “New South Wales at 800,642 km2 and accounts for 10% percent of the total land area of Australia.”

    Now, I don’t know what percentage of Australia’s landmass is deemed to be Australia’s farmland, but I assume as well as including highly productive coastal and irrigation strips, it would also include the low productivity large acreage stations through the dry outback regions, and all the farming conditions in between. I guess that the question *could* be raised as to what quality of farmland is controlled by the foreign interests, as part of this debate, as undoubtedly the most productive 10% of Australia’s farmland would produce far more than 10% of Australia’s farm output….

    I personally don’t buy into the “food security hysteria” Bernard talks of, but to suggest that “only” 11.3% of Australian farmland is owned or partly owned by foreign companies, probably accounts for a substantial slab of Australia’s landmass, and, depending on the quality of land owned in this way, potentially a much higher percentage of Australia’s farm productivity.

  • 12
    Bill Parker
    Posted Friday, 20 January 2012 at 9:32 pm | Permalink

    I too am not one of the hystericals but I am concerned about the near term future, and particularly the likely sources of phosphate as we inexorably move toward the time of shortages.
    To be reliant a resource that is either IN China or a politically disturbed region of West Africa is not a good prospect.

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