NORTHERN Territory Cattlemen’s Association Executive Director Tracey Hayes says the potential sale of Kidman and Co to foreign investors delivers an opportunity to maintain critical capital flow for the sector.
Ms Hayes expressed concerns about the over-focus on Chinese investors potentially acquiring the large iconic cattle station through media reports and other commentators.
She said the Territory’s cattle industry had a long and extensive history of foreign ownership, from the British - dominated by Lord Vestey more than 100 years ago - to the US, and more recently nearby growing Asian countries like Indonesia.
But she said because of the Chinese involvement, critical elements of the Kidman deal were being blown out of proportion, in some public commentary, which had a xenophobic undertone.
Other aspects of the deal were gaining little attention like about 30 per cent of the Kidman & Co’s investor-owners being based in the UK and therefore already having part foreign ownership.
Ms Hayes said if the cattle company was being sold to US interests, the origin of that capital flow into the northern cattle industry, would barely raise a ripple.
And although the station’s 11 million hectares represented 2.5 per cent of the nation’s agricultural land, in Queensland, SA, NT and WA, she said the properties were under pastoral lease hold arrangements.
“The purchases that are happening in the pastoral industry in the NT are for leases so the transfer is for the lease only and I understand that’s the process in other jurisdictions as well,” Ms Hayes said
Ms Hayes said NT pastoral leases were held in perpetuity which meant if the owners were managing properties appropriately, as per regulatory controls, the leases were ongoing.
“The important thing to note here is a commercial process is in place and the fact is the Kidman group of properties have been for sale for quite some time now and every opportunity has been given for local investors to participate in that process,” Ms Hayes said.
“I think the fact that they have found an appropriate model for purchasing the group is a welcome announcement for the further development of the north of Australia but also for the Kidman group.
“If you look back through the last 150 years or so of pastoralism in the north of Australia foreign investment has been common place in that market.
“What we are noticing the change in though is the origins of the flow of capital.
“In previous years the source of capital has been from Europe and America and regions such as that but what we’re experiencing now is a greater level of interest coming from Asia.”
Yesterday, Federal Treasurer Scott Morrison revealed he signed an order last Friday to prohibit the Kidman transaction from proceeding for 90 days, from the gazetted date.
It came after news broke that a Chinese-led joint-venture deal to buy Kidman & Co for $370 million had been approved with Australian Rural Capital taking a 20 per cent stake and Chinese entity Shanghai Pengxin 80pc.
Mr Morrison said the order would provide more time for him to consider the national interest implications “of this complex and sensitive acquisition” and he’d also asked Treasury to conduct an external, independent review of the sale and its tender process.
“My obligation is to make careful and detailed assessments of foreign investment proposals against the national interest and that is exactly what I intend to do on the Kidman matter as I did on the previous consideration of that transaction,” he said.
Ms Hayes said with a greater level of demand and increased interest in food production businesses, combined with a decline in the resource sector, the Australian ag-sector was “an exciting and interesting place to invest in, going forward”.
“I think we’re seeing a demand driven by the increasing levels of beef consumption in China particularly, but we’re also seeing savvy investors sensing an opportunity for worthwhile investment in the agricultural space,” she said.
“We believe investment is good for the future of Australian cattlemen.”
But Ms Hayes also said that investment opportunity was being welcomed given the dearth in cattle station sales that resulted from the devastating 2011 Indonesian live cattle ban.
She said cattle properties in northern Australia at that time “basically weren’t worth much at all”.
But that sale drought was finally broken in October 2013 when Indonesian commercial interests purchased two of the Top End’s best known cattle stations - Inverway and Riveren stations - owned by the popular Underwood family and rejuvenated the market.
“We went for more than a 12 month period without a property changing hands (and) the first entry into that market place was a foreign investor,” Ms Hayes said.
“That’s an example of where (foreign investment) can bring a very positive response in a market place and the flow of capital I think is incredibly important in any industry.”
Asked about the Treasurer’s delay on the Kidman transaction until after the July 2 election, Shadow Treasurer Chris Bowen said his party’s position on foreign investment was that it should be in the national interest.
“The Treasurer has said he needs more time to examine whether this is in the national interest,” he said.
“We trust and hope that that is his real reason for delaying this decision.
“We'll give him, if you like, the benefit of the doubt on that one because it is a significant sale and it should be considered closely and he should get the best advice possible.
“Foreign investment is important for Australia's future, but it must be in the national interest and it should be weighed up and there's a process to do that, the Foreign Investment Review Board (FIRB) advising the Treasurer of the day, it's the way it has been under governments of both persuasions and it will continue.”
Opposition leader Bill Shorten said Labor was very committed to Australia being a strong trading nation with good flows of foreign investment which helped generate local jobs.
But he said on the other hand, “you've got to make sure that Australian assets which are sold are in the national interest”.
“I have a general reservation about just putting everything up on the market to sell everything - it makes me feel uneasy,” he said.
Water Resources Minister Barnaby Joyce said in assessing the national interest of the Kidman transaction, it had to be proved the sale was “not to the detriment of the Australian people”.
NSW Nationals Senator John “Wacka” Williams asked why local superannuation funds weren’t looking at buying assets like Kidman and Co - given foreign investors had such keen interest - when there was almost $2 trillion in superfunds.
“Where’s our super industry?” he said.
Senator Williams said FIRB made recommendations to the Treasurer who ultimately had the final say on the foreign investment approval, as was the case in late 2013 when former Treasurer Joe Hockey blocked the sale of GrainCorp to US multinational Archer Daniels Midland.
“You know where I stand - keep Australia for Australians is my attitude,” he said.
