OPINION: THE federal Treasurer’s recent decision to prevent the sale of the S. Kidman and Co properties to foreign bidders, as a result of the proximity to the Woomera Prohibited Area (WPA), smacks of a decision looking for an excuse.
The timing of the announcement was perplexing, particularly in circumstances where Anna Creek Station’s proximity to the "green zone" within the WPA was known to all the bidding parties from the outset.
The WPA is essentially an area used by the Defence Department to test munitions.
Half of the Anna Creek Station pastoral lease is contained within the green zone which essentially means that non-defence users may be required to evacuate for up to 56 days per year from this particular zone.
The WPA once contained the infamous Maralinga testing area where the British government carried out nuclear tests in the late 1950s.
Despite multiple decontamination programs there are still concerns that the area remains contaminated to this day.
We had better hope that this decision does not have the radioactive half-life of the soil around Maralinga or the promised golden age for Australia’s agricultural industry will vaporise before our very eyes.
In this age of Google Earth and spy satellites, it seems fanciful to point to security concerns as a reason to scupper this deal because of the proximity to the green zone, in circumstances where worldwide intelligence agencies probably have a fair idea of the testing being conducted in the WPA in any event.
There is little doubt that we need massive amounts of foreign capital to boost the Australian ag industry.
The Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand report, authored by federal Member for Hume, Angus Taylor, identified, amongst other things, that:
- Between 2012 and 2050, around $600 billion in additional capital will be needed to generate growth and profitability in the Australia ag sector; and
- Successfully raising capital from a broad range of sources will be central to financing this growth.
There is no doubt that this is broadly understood by the Federal government as the Agricultural Competitiveness White Paper has identified agribusiness and food as one of the five national priority areas for investment.
There have been innumerable articles written and seminars presented over the last few years on the lack of interest by Australian superannuation funds towards the Australian agricultural sector.
Given the current dynamic period that the Australian agriculture industry is enjoying, if Australian superannuation funds do not see the value in the industry at the moment, they never will.
The Kidman bidding process has been in train since at least April this year when the potential sale was announced to the market.
An Information Memorandum was issued to prospective bidders in June and the short list was locked down in late October.
Given the interest that the sale has generated, this has been a seemingly well considered and patient process.
So it would seem incomprehensible that the deal advisors would not have consulted extensively with the Foreign Investment Review Board and the Treasurer prior to and during the sale process, to ensure that the there were no surprises.
For this reason, there must be other factors at play in the Treasurer’s pronouncement.
The concern within certain sectors of the community regarding foreign investment in Australian agricultural land is hard to fathom and it is too simplistic to point the finger at underlying xenophobia and food security anxieties.
These food security concerns are completely exaggerated, particularly in light of the fact that 70 per cent of Australia’s agricultural output is currently exported, so we clearly produce far more than we can consume in this country.
Critically, there has been a significant amount of foreign investment in the Australian ag sector for over a century.
By way of example, I had the good fortune to work on Wave Hill Station as a jackeroo when the UK owned Vestey Group sold Wave Hill Station (and other cattle properties) to Brian Oxenford in 1992.
The origins of the Vestey Group date back to the 19th Century when it was established by William (later Lord Vestey) and his younger brother, Edmund.
The brothers began by developing cold stores across the UK, Russia, the Baltics and Western Europe, and supplied large quantities of quality affordable meat to a growing UK population during the Industrial Revolution.
In the early 1900s, the brothers expanded into meat production, processing and distribution.
During this period, the Vestey Group purchased large tracts of agricultural land in Australia and South America.
The landholdings of the Vestey Group in Australia were so large at one stage that you could walk from Queensland to WA without ever leaving Vestey land.
These holdings were more substantial than the current Kidman portfolio, which is in the order of 100,000 square kilometres.
Apart from these substantial British land holdings, at one point or another, there has been other significant holdings by American and Brazilian interests in the Australian beef industry.
Let there be no doubt – the Treasurer’s decision was short sighted and just plain bad for the agricultural industry.
I fear that the government’s mixed messages regarding foreign investment in this country, will force much-needed foreign capital to consider alternative overseas markets.
Like the contaminated ground of Maralinga, Scott Morrison’s decision will have a lingering effect on the investment communities’ attitudes towards Australia for years to come.
And the only bomb going off will be the confidence of hundreds of Australian farmers hoping to cash in on once in a generation market conditions and investor sentiment towards Australian agricultural assets.
Trent Thorne is a Brisbane-based agribusiness lawyer. Follow Trent on Twitter @agintegrity
