June 11, 2012

 

Australia ropes Chinese investment in domestic farm sector

 

 

Australia's Trade and Competitiveness Minister, Mark Emerson said that the only way to substantially boost food production to meet rising global demand is by supporting the Chinese and other foreign investment in the domestic farming sector.

 

"If we really do believe that Australia's agricultural development can be funded from now on without any investment from sovereign wealth funds or state-owned enterprises, well I think that's a fool's belief," Emerson said in an interview on Australian Broadcasting Corp. television after returning from overseas, a trip that included trade talks in Beijing.

 

The minister, however, assured critics that produce from Chinese-owned farms in northern Australia will only be exported at world market prices and won't subvert normal trade channels. This is a key element underpinning a joint study that is now being finalised by Australian and Chinese agencies looking at opportunities for China to develop new agricultural production capacity in Western Australia and Queensland states, he said.

 

The minister specifically refuted suggestions that the government is considering allowing foreign investors to buy Australian farms, dedicate production to their home markets and by-pass normal export channels and regulations.

 

"The project that I've undertaken with the Chinese authorities specifically recognises that the production of Australian agricultural produce would be sold on the world market at world market prices," Emerson said.

 

China is Australia's biggest trading partner with two-way merchandise trade in 2011 totalling US$112.0 billion, of which 39% was iron ore. Australian farm exports to China included AUD2 billion (US$1.997 billion) of wool and also grains, meat and sugar.

 

The joint study, running in parallel with the development of a macro Australian policy called the Asian Century White Paper project headed by former Treasury Secretary Ken Henry, aims to identify what Australia must do to capitalise on emerging opportunities and meet challenges arising from rapidly developing Asian economies.

 

The white paper is slated for release later this year as is the northern Australian agricultural study, a spokesman for the minister said Friday (June 8).

 

Emerson said he had previously agreed with China's Commerce Minister Chen Deming that Australia and China can work together to ease global food security pressures by boosting Australian farm output to meet demand from a projected global population of nine billion by 2050, up from seven billion now.

 

This will help keep world food prices lower than they otherwise would be by ensuring plentiful supply in the international market, he said.

 

It won't involve the growing of food exclusively dedicated to the Chinese domestic market, as some "scaremongers have asserted," Emerson said while throwing his support behind continuing foreign investment in the farm sector.

 

Chinese interests including Shanghai Zhongfu group are reported to be bidding for a large parcel of agricultural land under development in the Ord River district in Western Australia State's deep north.

 

The assessment of 14 proposals to develop the more than 15,000 hectares of new farm land at Ord River from local, national and international parties is continuing.