If its big $370 million-plus pastoral country sale goes ahead, S. Kidman and Company will have pulled off a “pretty remarkable achievement”, says veteran rural property agent Bruce Gunning.
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“All the knowledgable people seem to consider it an excellent price for that part of the country,” said the Ray White Rural’s Sydney-based principal.
The Darkan Australia-led syndicate is offering to pay at least $20m more than its parent company bid six months ago, but the current deal excludes the 23,700 square kilometre Anna Creek Station which represents about 25pc of the current Kidman estate.
“Well done to the Kidman management - they’ve scored a try under the goal posts and kicked a conversion,” Mr Gunning said, noting the flow-on impact on land and enterprise values in remote cattle country could be significant.
“I’ve no objection to the Chinese, Americans, Irish or any other overseas investors paying a record price for a 1.5 per cent piece of Australia - big landholdings are hard to find and in demand.
“This sale will provide a guide to the market and comfort to the banking industry and landholders in general.”
Liberal Senator and frequent foreign investment sceptic, Bill Heffernan, also welcomed the intense offshore interest Kidman and agriculture generally.
However, he wants to be certain farm production and revenue generated is captured in local commodity markets and sovereign-funded entities do not develop direct supply chain arrangements which avoided paying a fair share in local taxes.
“The bottom line is China will need to feed half its population from food sources generated outside Australia within 25 years,” he said.
“About 65pc of the world’s 9 billion population will be in Asia where a third of that region’s farmland will be lost by 2050.”
“It’s hardly surprising the Chinese or others are paying premiums to invest in our agricultural resources.
“If we aren’t proactive about developing our own farming opportunities in northern Australia somebody else will come in and do it for us - possibly in a manner we won’t like and won’t be able to stop.”
Senator Heffernan said local farm sector players shouldn’t worry too much about being unable to compete against the new money pouring in.
“We’ve often seen rushes of offshore and corporate interest in farms, but historically they don’t tend to retain that interest for too long.
“Droughts and big salary costs often send them broke, creating opportunities for family farmers to come in and take up longer-term investment positions.”
Former head of UK-owned Clyde Agriculture, David Boyd, agreed any overseas investors in Australian agriculture needed to be pay close attention to local management experience to help ensure their survival.
“We’ve had waves of investment from foreign entities before and they’ve quickly learnt the Australian environment is almost unique in its variability and very hard to budget for,” said Mr Boyd, who also spent 28-years with UK owned pastoral house Dalgety.
“If you’re going to be in the game, especially in those pastoral zones you need a long agenda which allows for plenty of flexibility.
“You also need to know how to conserve – stockfeed, cash, water and livestock.”
“It certainly pays to have local expertise on hand, but plenty of corporate investors – and Pitt Street farmers – have failed to stay in the farming business long enough to make their investment worthwhile.”
