Back in 1997 my partner Alistair and I set off across the Nullarbor Plain by truck accompanied by 4000 sheep, three dogs, two horses and our furniture. We’d sold our mixed farm in Kojonup, Western Australia and spent the proceeds — plus a bit more — on a bigger property in Coonabarabran in New South Wales.
Like most farmers, we borrowed to expand our enterprise. We set the goal of paying off the new farm in a decade.
But things didn’t go quite to plan. The first two years the floods came. Then we ran into a one-in-100-year drought that lasted eight years.
We applied the best drought management strategies known at the time and paid careful attention to our financial risk planning. Reviewing our “feed on offer”, we realised three months ahead of time that we couldn’t eke out pastures for our 15,000 sheep any longer. There was no affordable feed or agistment nearby. Accessing more capital meant an unacceptable challenge to our risk management.
Like any industry, agriculture requires capital, and it’s going to require a lot more in the coming decades. It’s been estimated that Australian agriculture needs to find $600 billion for investment on farms and supply chains between now and 2050, plus a further $400 billion to allow young farmers to buy out their ageing parents. A significant proportion of that investment is for agricultural land and infrastructure. That’s the kind of investment we need if we’re to meet the global challenge of increasing food production 70% by 2050 to feed the growing world population.
But we are a nation of just 23 million people. We don’t have that kind of capital. A report by Port Jackson Partners for ANZ Bank says traditional sources of finance for farmers — debt and savings — won’t be anywhere near enough to raise the money needed.
For the last two years I’ve worked with the National Farmers’ Federation to develop and write the Blueprint for Australian Agriculture 2013-2020. It involved some 4000 people from the agriculture industry coming together through surveys, meetings, forums and market research, to formulate a plan that would carry agriculture through the coming years.
I realised, through the blueprint process, that Alistair’s and my experience was in some ways a microcosm of what’s facing Australian agribusiness.
Alistair and I were good farmers, working with the latest known technologies to deal with the challenges of running a successful agribusiness. But without access to capital during an eight-year drought that couldn’t be predicted, we had stalled.
“That indirect access to capital in a tough time — through foreign investment — saved the day for us.”
Alistair remembered Ken Hamilton, an old friend from his jackarooing days who came out from his native Wyoming to learn more about farming. Ken had often said he wanted to “buy a ranch” in Australia. We did some research and picked up the phone. Would Ken like to purchase a run-down farm on the Liverpool Plains, with six months worth of feed and potential for improvement? We would lease the farm, move some of our sheep over there, and improve it over time.
By then Ken was vice-president of the US Farm Bureau in Wyoming. He jumped at the chance, and Alistair and I became beneficiaries of small-scale foreign investment in Australian agricultural land.
Foreign investment has been integral to Australian agriculture and our regional communities. It’s allowed us to improve efficiencies and productivity, develop technologies, create jobs, maintain rural communities and remain internationally competitive.
Rather than “strict” controls on foreign investment in agricultural land, I believe we need strategic and sensible controls to ensure such investment doesn’t threaten the national interest. The most recent surveys into land ownership suggest that 89% of agricultural land is entirely Australian owned, and a further 6% is majority Australian owned. The proposed National Foreign Ownership Register For Agricultural Land will allow us to keep track of the size and location of foreign landholdings, while the Foreign Investment Review Board mechanism means proposed investments are subject to a rigorous national interest test.
It’s also up to us to take initiative. During the blueprint process we started to canvass other structures for owning and operating farms to attract investment, such as equity partnerships (modern variants of share farming) and take-off agreements (like those in the mining sector). These can offer new opportunities for foreign investment in agricultural land, with fewer risks.
We got through the one-in-100-year drought, thanks to Ken’s “Aussie ranch” and Alistair’s agriculture and risk management skills. We finished leasing it a while back, and Ken sold the property a year ago for a good return.
Since then, Alistair and I have bought a 2900-hectare sheep and cropping property near Tamworth, and we run a nearby 4500-hectare beef and cropping irrigation property for a Sydney family. That indirect access to capital in a tough time — through foreign investment — saved the day for us.
Strategic controls on foreign ownership of agricultural land will mean that foreign investment can do the same thing on a wider scale for Australian agriculture.
*Robbie Sefton is a farmer and rural communications specialist, a graduate of the Australian Rural Leadership Program, a board member of the National Australia Day Counciland is participating at the upcoming IQ2 Debate, which asks the question “Should foreign investment in agricultural land and infrastructure should be strictly limited?”