CHINA’S sovereign wealth fund is negotiating to seek a stake in Australia’s largest dairying operation, the Van Diemen’s Land Company, which operates in Tasmania.
The enterprise, which is in the north-west of the state, has 25,000 dairy cows and 6500 beef cattle and some 19,000 hectares in 27 farming operations, most of them dairying. It employs about 160 people.
It is now proposing to double its production and its workforce, with a $180 million investment.
It is understood that the sovereign wealth fund has approached the Foreign Investment Review Board for preliminary consultations, prior to submitting a formal application if a deal is sealed.
Tasmanian Premier Lara Giddings this month met the president of the China Investment Corporation, Gao Xiqing, when she was in Beijing to discuss trade and investment opportunities in her state.
She said after the talks that the China Investment Corporation was particularly interested in exploring agricultural opportunities created by the state’s $400 million irrigation program, which would help double dairy production.
The Van Diemen’s Land Company is one of the country’s oldest, dating from 1824, and is regarded as iconic in Australian agriculture; it is now almost entirely owned by a New Zealand company, which is a fund of the New Plymouth District Council, based in the Taranaki region.
The Chinese investment, if it goes ahead, could become another test of unity within the Coalition on the foreign investment issue; there has been unease within the National Party especially about Chinese state entities buying into Australian farmland.
A bid for Cubbie Station by a Chinese-dominated consortium, which was approved by the Foreign Investment Review Board, prompted an outcry from Nationals Senate leader Barnaby Joyce and others in the party.
Ms Giddings said the China Investment Corporation had more than $440 billion worth of assets under management.
Tasmanian federal Labor MP Sid Sidebottom told Parliament last week that the Van Diemen’s Land Company was very environmentally conscious and was proposing various reserves as an offset to the land that would be converted to increase its production.
The CIC says on its website that it ”usually does not take a controlling role – or seek to influence operations – in the companies in which it invests”.
”CIC maintains a strict commercial orientation and is driven by purely economic and financial interests,” it says.
”CIC selects investments based on established investment principles and values.”
The chief executive of the Van Diemen’s Land Company Michael Guerin told The Age last night it had been seeking to raise equity capital domestically and internationally for some months.
Read more: http://www.theage.com.au/business/china-seeking-stake-in-australian-dairy-20120923-26f63.html#ixzz27KoJMSIK
• Christine Milne: Chinese dairy investment – is this in the national interest?
The Australian Greens are concerned about the proposed sale of Tasmania’s dairy land and processors to Chinese investors, and ask whether it is in the national interest to lose ownership of land and water when young farmers want to get onto the land but are prevented from doing so by poor farm gate prices resulting from the supermarket duopolies.
“We want to make sure that vertical integration from the farm, to the processor to the Chinese consumer does not constitute “out sourcing” and distort markets for land and dairy products.” Leader of the Australian Greens, Senator Christine Milne, said today.
“The Greens have been pushing for a long time to have a national interest test so that we can better evaluate foreign investment into agricultural land and water licenses and ensure that Australian interests are protected. We need to cement into legislation criteria to determine what is in the national interest because it is now a subjective judgement of the Minister.
“I want to help young farmers be able to buy land.
“At the same time farmers who want to sell their farms need a market that is profitable enough to attract buyers. This is not happening because of low farm gate prices imposed by the supermarket duopoly.
“Surely we need to examine what is wrong with our current policies that are driving farmers off the land, rather than sell land to countries seeking to outsource production.
“What is additionally worrying is that the proposed expansion of the VDL company would be dependent on clearing 7,000 hectares of native vegetation – and stands in direct violation of our clearing laws and federal laws on threatened species, the Tasmanian devil in particular.
Tasmanian Minister Green has granted an exemption to clearing laws, demonstrating bad practice and setting a terrible precedent. Federal Labor will now determine it and once again Labor demonstrates it cannot be trusted on the environment.
“We must ask, how is this development in the national interest? How will it benefit Aussie farmers and our wider community, and what consequences will it have on our natural environment?”
• TFGA: Foreign investment in Tasmanian agriculture:
The Tasmanian Farmers and Graziers Association has no problem with foreign investment in Tasmanian agriculture. On the contrary, it welcomes it.
Tasmanian agriculture – and Australian agriculture more generally – has been built off the back of foreign investment.
“Tasmanian agriculture is expanding to meet demand for our renowned clean and green products,” TFGA chief executive Jan Davis said today. “This expansion requires funds and these investment opportunities are often not being taken up by Australians.
“For instance, Australian farms may be returning 10 per cent on investment but Australian superannuation fund managers want more than that. To have viable farming businesses, we must have viable value-adding industries in Australia to process what they produce. Without foreign investment, we will not have those processors.
“If you take the position that farmers can’t sell their land or their businesses to foreign interests, you are depriving them of an option for which they have to be compensated. If that is the national interest position, then every Australian has to contribute to compensate the farmer who has every right to expect the best price for their lifetime’s investment. That is a matter of equity and justice,” Ms Davis said.
“Foreign investment is seen by many as Australia selling off the farm. The TFGA does not share that view. Our role in life is to help feed the world. By allowing foreign investment in our land and processing enterprises we are helping to achieve just that. The land does not move; it is still here.
“Farmers must enjoy the same rights as all other Australian citizens, to expect the highest price for their assets.”
Ms Davis said the TFGA’s position was that we can have foreign investment and we can protect the national interest. These things are not mutually exclusive.
