Chinese investment in Australia is being widely discussed though foreign investment in our agriculture and food companies has been going on for decades, historically coming from the US and the UK. This has changed. I hear New Zealand owns a huge chunk of Tasmania!
It seems governments – especially from Asia – are investing in Australian, South American and African agriculture to ‘ensure they are ready for the future. Emerald Group’s Alan Winney says:
“Many of these investors are sovereign-linked and are taking a 30 to 50-year perspective on their investment returns.
For food security reasons, many of the Asian and Middle Eastern governments are not only investing directly via sovereign wealth funds and state-owned enterprises, they are also actually supporting and encouraging the public and private companies to invest..
Whether the owner of a business is Australian or not is irrelevant. The behaviour of the owner is more important.
If they’re operating in the spirit of ensuring our industry and our growers are as competitive as possible, and sustainable for the long term, that’s what matters.”
Emerald Group is relatively new, independent, and now half-owned by Japanese commodity trader Sumitomo. It is one of Australia’s leading grain marketing companies – working directly with growers across all major farming regions – and typical I read, of foreign investment in Australian agriculture.
Alan Winney says foreign investment in Australian agriculture is now a mix of ‘old world’ traders growing their assets and ‘new world’ companies, mostly from Asia.
The overall result is a few big agribusiness aggregators with many of the global players being quite active in Australian grains, seeking access to production, distribution and food assets.
“Further consolidation will occur until we reach a similar pattern to global oil and mining conglomerates.
The formula appears to be: establish critical mass, gain control of infrastructure and domestic demand and use it to maximise arbitrage opportunities and synergies.”
Global village? Global environment..