02 Feb 2012

Foreign investment in agriculture: no special treatment yet

by Heath Lewis, Scott Girdler

The Australian Government has decided not to tighten foreign investment controls in relation to the acquisition of Australian agricultural land and businesses.

Following an ABARES report on foreign investment in the agricultural sector, the Government has decided not to tighten foreign investment controls in relation to the acquisition of Australian agricultural land and businesses. In particular, the monetary threshold for the notification of private acquisitions of farms remains the same as for Australian businesses generally.

The Government released the ABARES report on 18 January 2012 and announced that it would, consistently with the report's recommendations, expand ABS data collection and the agricultural census to provide more information on foreign investment in agriculture and the ownership of Australian agricultural land.

Some new FIRB policy guidance

The release of the ABARES report coincided with the release of a policy statement on foreign investment in agriculture. The policy statement highlights the importance of foreign investment in boosting Australia's food production capacity and efficiency. It states that, "in assessing foreign investment applications in agriculture, the Government typically considers the effect of the proposal on:

  • the quality and availability of Australia’s agricultural resources, including water;
  • land access and use;
  • agricultural production and productivity;
  • Australia’s capacity to remain a reliable supplier of agricultural production, both to the Australian community and our trading partners;
  • biodiversity; and
  • employment and prosperity in Australia’s local and regional communities."


The ABARES report and the Government's reaction to it follow the rejection of the Foreign Acquisitions Amendment (Agricultural Land) Bill 2010. That Bill was a private member's Bill introduced in late 2010 by Senator Xenophon and Senator Milne, which aimed to place further restrictions of foreign acquisitions of Australian farmland.

In recommending the rejection of the Bill, the Senate Economics Legislation Committee acknowledged "the evidence which suggests that the $231 million threshold[1] for foreign investment in the agricultural sector would rarely trigger a FIRB review" and recommended that data gathering and research should be completed before any adjustment to the threshold was made.

The decision not to adjust the threshold in relation to agricultural investment follows a 2011 ABS survey which indicated that:

  • 99% of Australian agricultural businesses are entirely Australian owned;
  • 88.6% of agricultural land in Australia is entirely Australian owned; and
  • 5.8% of Australian agricultural land is majority owned by foreign investors.

The ABARES report quoted the results of the ABS survey and compared them to the results of a 1984 ABS survey. The comparison showed that between 1984 and 2011:

  • the percentage of entirely Australian owned agricultural businesses fell from 99.7% to 99%; and
  • the percentage of entirely Australian owned agricultural land fell from 94.1% to 88.6%.

The ABARES report considered studies which compared Australia's agricultural foreign investment restrictions with those of other OECD countries, and other countries with large agricultural sectors, and found that Australia was the 17th most restrictive (behind countries including Japan, Korea, New Zealand, Brazil, India, China, Russia and Indonesia and ahead of the United Kingdom, South Africa, the United States and Canada)[2]. The report concluded that any further barriers to foreign investment in Australian agriculture would adversely affect the performance of Australian agriculture.

However the ABARES report does suggest that information gathering on foreign investment be improved with a view to increasing transparency to the public and facilitating better informed policy-making, a recommendation that the Government appears to have taken up.

What next?

Concerns about foreign investment in agricultural land and businesses are part of the larger issue of food security, an issue that is of growing importance in Australia and globally.

Although the Government appears comfortable for now that the extent of foreign investment in Australian agriculture does not pose a threat to Australian food security (and in fact promotes food security), there is ongoing debate. The Opposition spokesman on agriculture and food security, John Cobb, has announced that the Coalition would be prepared to lower the FIRB notification threshold in respect of the acquisition of agricultural land.

It seems that the foreign investment rules in relation to agricultural land and businesses may be revisited in the short term.

[1] the monetary review threshold is $244 million as of 1 January 2012

[2] The ABARES report notes that comparisons between countries, particularly federations, are difficult to make as regional restrictions (for example at State/Provincial level in the US and Canada) were not taken into account in the rankings.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.