TRADE Minister Craig Emerson has outlined plans to harness capital from emerging economic giants such as China and India to spark a revolution in Australian food production.
Dr Emerson believes rising global food demand will provide lucrative opportunities for Australia but warns that the scale of investment required to meet the demand will require offshore investment.
He told The Australian yesterday that just as foreign investment by Asian nations seeking energy security had bankrolled the development of the booming resources industry in previous decades, the demand for food security could unleash a new wave of investment in Australian agriculture.
While Dr Emerson promoted his plan as a way to reinvigorate regional Australia, the opposition rejected foreign investment, vowing to provide incentives to encourage investment of the nation?s superannuation savings in the farm sector.
And the National Farmers Federation, backing the push for greater access to capital, demanded more policies to boost productivity and strengthen the economy to help farmers rise to the production challenge.
Research released this month by the Australian Bureau of Agricultural and Resource Economics and Sciences found potential for Australia to lift the value of its agricultural exports by 140 per cent by 2050 in real terms.
The report said emerging middle classes in Asia, Eastern Europe and Latin America created increased demand for beef, wheat, milk and sheep meat; an ABARES report released in January backed foreign investment as the best means to fund the expansion.
The point was underlined last last week when Max Ould, the chairman of food giant Goodman Fielder, told The Weekend Australian that local capital markets were not big enough to support his company?s needs.
?We welcome foreign investment,? Mr Ould said, commenting on a recent move by Singaporean company Wilmar to take a 10.1 per cent stake in the company.
Yesterday, Dr Emerson said drought-prone Australia needed major investment to improve water infrastructure and create enough equity for pastoral and agricultural companies to be able to access bank finance.
?Anxious about food security, China, India and several Middle Eastern countries have increasingly large investable surpluses that they are looking to deploy in the global food production task,? he told The Australian.
?There are powerful market forces at play here. This could be the catalyst for bringing Australian agriculture into the new economy.?
He was discussing his new portfolio responsibility of Competitiveness, which he said would focus on assisting Julia Gillard position the nation to milk the rise of the Asian middle class for business opportunities for Australia.
With the government working on a white paper on the issue, Dr Emerson said animal protein sourced from beef, sheep, chickens, pigs and fish would displace grains as a food source for the burgeoning middle-class populations. ?Just as Australia has established itself as a reliable supplier in meeting Asia?s minerals and energy security needs over the last quarter of a century, it can establish itself as a reliable supplier in meeting Asia?s food security needs over the next quarter of a century,? he said.
?Attaining food security . . . will require deeper integration of the Australian economy with the economies of Asia through foreign investment in agricultural production and logistics in Australia and technical co-operation by Australian governments and businesses in food production in Asia.?
Dr Emerson said he was not proposing ?selling off the farm?. Instead, the government was considering ways to encourage foreign equity investment in Australian food-producing companies, which he said would make it easier for them to raise the finance necessary to expand and meet the new market demand.
?I am no hydrographer, but I don?t believe that there is not more we can do to better utilise water,? Dr Emerson said. ?When the real price of a product rises, investment projects that might not have been viable at the old price might be viable at the new price. It requires risk-taking but it also requires the funds.?
Opposition water spokesman Barnaby Joyce said Dr Emerson was right about the opportunities for Australia, but wrong about seeking the investment overseas.
?It?s like saying your house isn?t big enough and that you want your neighbour to build you an extension,? Senator Joyce said. ?Instead of saying, ?Let?s get the money from China?, how about we try to do it ourselves??
Senator Joyce said Australia would be ?the beggar at the banquet? if it sought investment from China. A Coalition government would seek to unlock Australian savings in superannuation funds by offering tax concessions for income off infrastructure and agricultural investments.
While differing on the way to raise the money to fund an increase in agricultural output, Senator Joyce backed Dr Emerson?s optimism about the prospects for Australian agriculture, noting that as people moved out of poverty and into prosperity, they wanted better food and better clothing.
?We think it?s romantic to go to an Asian restaurant and eat peanuts and lettuce,? he said. ?In Asia, they eat peanuts and lettuce because they can?t afford meat. But that?s changing.?
NFF president Jock Laurie said farmers would be delighted that both sides of politics were considering the future for Australia?s farmers, urging both to strive for competitive policies.
Mr Laurie said foreign investors had been active in the Australian foods sector for decades but warned that the government must ensure the investment procedures provided absolute transparency.
?We are handy (to Asia) and we now export about 60 per cent of the food we produce,? Mr Laurie said. ?So we are up to the challenge of increasing production and we know we have to remain competitive on an international basis to get into these markets.?
Mr Laurie said the money needed to boost the sector could come from overseas or from superannuation funds.
Mr Laurie said governments could help across a range of areas beyond attracting investment, with funding in research and development important to make the industry more productive.
?They need to get the Australian economy in a position to allow industry to thrive,? he said. ?Interest rates have to be competitive; so do labour rates.?
The government also needed to continue its strong efforts to open overseas markets to Australian exports through reducing trade barriers and to eliminate red tape preventing farmers from performing at their best.
?Business and industry will drive the efficiencies that are required,? Mr Laurie said. ?But you?ve got to allow them to use their intelligence and business skills to do it.?
Source: http://junkscience.com/2012/03/11/aus-tap-asia-for-farm-funding-says-craig-emerson/
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