A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Is Australia discovering the strategic reach of its agriculture?

February 29, 2016

Is The Cairns Group1 coming up with a new strategy? This is a fair question when one observes the recent protectionist positions taken by countries such as Australia and New Zealand, which nevertheless rank among the world’s most liberal nations. In November 2015, the Australian Government has in fact vetoed the acquisition by any foreign investor of Kidman & Co., Australia’s largest beef producer, and this on the grounds of “national interests”. Founded in 1899, S. Kidman & Co Ltd is one of the country’s major beef producers with a herd of 185,000 cattle. More importantly, it is Australia’s largest farmland owner with 1.3 percent of the country’s territory, 2.45 percent of its total farmland, covering 101,411 square kilometers or one fifth of France’s total area.

If the blocking of Kidman & Co’s takeover was controversy, the veto is very much a part of Australia’s strategy to increase its control of foreign investment in agricultural land, especially due to the country’s public opinion regarding China’s appetence. Thus, since March 1, 2015, any foreign investor wishing to purchase land with a value exceeding $15 million––or €10.4 million––must file an application with a national entity, which can reject the investment. Such plan was already in place, but the threshold was set at $252 million, or €175 million. Treasury Secretary Scott Morrison is of the same mind when he states “Australia welcomes foreign investment when it is consistent with our national interest.”

Yet, Australia’s strategic vision for agriculture is far from being as developed as elsewhere in the world. A different sector means different challenges. On February 24, 2016, Scott Morrison authorized the takeover by the Chinese firm Moon Lake Investments of the Tasmanian Land Company (TLC), which counts among its assets Australia’s largest dairy farming corporation––Van Diemen’s Land (VDL) Company. This purchase, estimated at USD 307 million, includes the assets of the company and 20 000 hectares of land owned by the Tasmanian Land Company. VDL milks 18,000 cows over 7000 hectares on 25 dairy farms in northwest Tasmania and produces about 8 million kilograms of milk solids a year.

Just as it was the case for Kidman & Co, the decision is far from meeting unanimous approval. In fact, some experts and political leaders are concerned by the consequences of rising domestic prices of milk and dairy products, at a time when the sector is already impacted by the global milk crisis. Andrew Wilkie, an independent member of parliament, even maintained that this transaction proves that “the Government either does not understand or disregards the importance of strategic assets [such as agriculture] remaining the property of Australia.” For Jan Cameron, a businesswoman and one of Australia wealthiest persons, Scott Morrison has nothing else but “betrayed the future of the Australian people” by authorizing the sale of VDL.

Yet Scott Morrison has confirmed that the purchase was not made without having passed "the test of the national interest", taking into consideration the impact on "national security, competition, economy and community". In other words this takeover had to comply with a number of conditions: compliance with the new tax regime for FDI, maintaining existing jobs, investing in projects that benefit the Tasmanian economy in order to create additional jobs in the region, and finally ensuring that the production of dairy products will continue to supply the national market.

The term of “national interest” seems very accommodating when huge sums of money affecting Australia’s finances or political pressures are involved. The Canberra Government’s position on supporting its agriculture essentially fluctuates in step with trade opportunities, all the more so, since the meaning and legal framework of “national interest” remains largely vague, and allows for an abundance of interpretations (contrary to the situation in New Zealand). Nevertheless, the Australian Government’s interventionism has been increasingly obvious for the past few months, and is confirmed by the country’s public opinion that is, in addition to the deep-rooted fear of “the Chinese investor”, becoming aware that agriculture and agro-food represent a national security issue.

1 The Cairns Group is a coalition of 19 agricultural exporting countries including Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand and Uruguay.

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