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Foreign Ownership

Foreign Ownership

There is still a debate raging over foreign ownership of Australian farms, and it seems there is little chance of it abating, whilst this is going on more of our prime agricultural land is being bought up by foreign interests.
On one side of the debate people believe there is very little difference between an owner residing in Sydney or Beijing.For its part NFF, TFGA and many other state faming bodies have a policy that supports foreign ownership, and have decided that foreign ownership of Australia farms will only cause a few emotional problems, and there are no industry or national problems created by foreign ownership. I can’t help but feel that NFF and others may have lost the plot on this issue.What everybody talks and debates about is whether we are headed for a global famine in the not too distant future. There is no doubt that as world populations increase there will be more growing demand for food and fibre, and the land it is grown on. It is not rocket science to see agricultural land and food will become a volatile and valuable commodity.However what we see at present in Australian are many farmers for a variety of reasons struggling to remain competitive and get a price for his product that is above the cost of production.There are many reasons why this is happening, and there is a transition process happening in Australian Agriculture. However what stands out are farmers struggling under the supermarket duopoly and their enormous muscle which they flex on an ongoing basis. The other huge problem is of course importation of food, clearly farmers can’t compete against cheaper labour, employment conditions, QA standards, and government subsidies list goes on.Take China which is becoming increasingly wealthy and looking to feed its people, China is also able to produce food at a fraction of the price we can in Australia and the Chinese through Government owned enterprises are able to buy strategically large tracts of agricultural land, the price of the land does not seem to be a barrier, but it is certainly more than Australian farmers can afford to pay.Agricultural land prices are determined in part by what that farm can grow, and sell. I would argue that many farms in Australia are cheap because farmers simply can’t get a reasonable price for their product that will generate enough cash to pay all bills and leave money as surplus cash.. This of course leads local investors giving agriculture a wide berth.What is happening now will not have a huge impact, if we have continued foreign ownership there will be ramifications, and I wonder what farms will be worth in years to come when places like China have to pay the same wages and conditions Australian workers enjoy. It will be interesting to see a new dawn whereas we all have to play on a level playing field. That is of course if overseas country’s don’t subsidise their farmers in other ways to keep production going.By then it could be common for us to see foreign countries bringing ships to Australia loaded with machinery and then taking the product out of Australia on the ships to be processed in another country. Will this flat earth economics policy be good for long term agriculture and our regional communities?It is interesting to look at the sort of returns a producer may receive.In Tasmania through the department of primary industries water and environment as i suspect in other states there has been work published on gross margins on quite a few products. What I have endeavoured to do is pick products and summarise the returns that one may expect.Beef breeding in Tasmania using the assumptions that grazing 100 ha with 36 inch rainfall. Running 195 cattle consisting of 155 pregnant cows and heifers 35 yearling heifers five bulls at a stocking rate of 22/dse .The value of the herd $180,000. Income from cattle sales would mean $80,000 after the costs of fertiliser, haymaking machinery costs and amounts for interest on money invested in the enterprise. one could expect an income of $28,000.

Prime Lamb production 100 ha with 800 breeding ewes and having a total stock value of $82,000 one could expect $18,000 of wool sales ,and livestock sales $90.000 consisting of 480 fat lambs at $125 and 480 store lambs bringing $80 per head. After costs one could expect $52,000 return from the enterprise.

Since these figures have been published the price of lamb has gone south lambs were worth up to $6 a kilogram, but now languish at $3.00 a kilogram. So a lamb weighing 20 kg that would have bought $120 would now bring $60. In simple terms the lambs we budgeted at $64,000 now become worth $32,000 and stores one could imagine would be struggling to make $50 which of course would take another $14,000 off the bottom line and with the reduction in culled ewe prices in the enterprise you may be in negative territory.

Carrots production is another enterprise quoted , in Tasmania the yield is about 67.5 tonne per hectare of saleable carrots, at $129.00/tonne with total income of $8,707.00. margin after costs? . . One experienced producer told me that he grew several hectares of carrots and he felt he would have been better to give the packing shed a cheque and stay away as he suffered a substantial loss by trying to grow them.

There has also been a number of producers who have in recent times declined to take up potato contracts saying they can’t make any money from them.

Producers that I speak to are very puzzled when they see carrots selling in excess of two dollars a kilogram on the supermarket shelves, whilst at the same time producers are getting between $.80 and $.90 a kilogram, I wonder who is being ripped off.

There are many misconceptions regarding who gets what out of the retail dollar, this is exacerbated

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with evidence given to Parliamentary enquiries and others where it is on record where with one supermarket saying the producer gets between half and three quarters of the retail dollar.

It makes one wonder about the people sitting on these committees, or the people who actually checks any figures given in evidence, if they do, and where are the industry bodies bring such wrongs to account.

There is an old saying farmers buy retail, sell wholesale, and pay the cartage both ways, I am sure this is true, but more importantly what is the effect of this uneven equation?. My view is that it helps those foreign owned countries buy up our land.

Surely if agriculture in Australia is to survive and prosper then we need urgent open debate and change.

Australian Beef Association
P.O. Box 529

Mowbray, Launceston, TAS7250

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