Chinese rural investment lower than most think

Australia's pending 1 March tightening scrutiny of foreign ownership in agriculture highlights just how sensitive the ownership of the agricultural sector is.

It was underlined when in 2013 the government blocked the proposed $3.4 billion takeover of GrainCorp by US company Archer Daniels Midland.

Before the 2013 federal election, three quarters of people wanted tighter restrictions on land sales, according to an ABC survey.

A Lowy Institute poll last year found that 56% of people thought there was too much Chinese investment in Australia, compared with 37% who said it was the right amount.

“There is concern among a rural constituency that land will be bought by Chinese investors, who will export all the products and distort export prices,” Hans Hendrischke, professor of Chinese business at Sydney University told the Financial Times last weekend.

“But the fact is that investment in agriculture is needed and the volume of Chinese investment in agriculture is lower than many people think.”

Between 2006 and 2012 Chinese investors invested $1 billion into Australian agricultural businesses, which amounted to 2% of total Chinese investment in the country.

This compared with $36.8 billion investment in mining, according to a report, titled Demystifying Chinese Investment in Australian Agribusiness compiled by KPMG and Sydney University.

The Financial Times noted agreement on a trade deal between China and Australia in November had heightened interest in Australia’s agricultural sector.