As the demand for Australian farm products skyrockets in Asia, corporate Australia is buying up drought-crippled but viable rural properties at bargain prices.
Conservative federal MP Bob Katter proposed legislation late last year that would force banks to allow farmers two years to sell foreclosed properties instead of forcing 6-week fire sales. Katter cited sources in the agricultural industry on forced bank sales, saying that with only two months to sell, a farmer would be lucky to get 40% of market value for their property, but with two years to sell a farmer could expect to obtain 80% of market value.
The legislation would also stop banks imposing confidentiality agreements that allow them to bully their victims with a range of dirty tricks, now being investigated by a Senate banking inquiry.
Action is being mounted in the Federal Court alleging that ANZ forced farmers into “engineered defaults” and entrapped them into signing changed loan contracts when it bought out the loan book of the Landmark group in 2009.
This corporate bullying has a terrible social cost. Lifeline figures show that when a severe drought hits a rural community and financial and emotional stress levels climb, suicide rates increase sixfold.
A new Rural Bank
A record 86% of Queensland is now drought-declared, following three failed wet seasons. Many farmers are without the funds to re-stock their properties when the drought breaks. It is in this context that the banks are forcing foreclosures of properties that have not defaulted on mortgage payments and selling them at only 40% of market value.
There is a dire need for a government with vision to re-establish a Rural Bank to offer long-term loans at 2% interest and cheap farm insurance to viable, sustainable rural businesses, so that farmers and their communities can continue to produce clean affordable food, manage the Australian landscape to minimise bushfires and keep our water catchments clean.
A Land Trust is also needed to buy land off retiring farmers — the average age of Australian farmers is 55 — at a fair price and sell it to young farmers at an affordable price to allow them to get into the industry and set up sustainable, low-carbon infrastructure and businesses.
Instead, corporations are buying viable farms at foreclosure prices and both major parties are making it easier for them to do so. Recently, the federal government moved to establish a foreign ownership register of agricultural land and to lower the screening threshold on foreign purchases of Australian agricultural land from $252 million to $15 million from March 1 to "improve scrutiny".
But these changes mask the fact that Australia's laws are directed more at ensuring government is seen as overseeing foreign investment than restricting it.
The blocking of the $3.4 billion sale of the GrainCorp grain handling infrastructure network to major US multinational food corporation ADM in December 2013 is an example of this political game of playing to public perceptions rather than actually aiding the development of the agricultural industry.
Farming creates 1.6 million jobs in the complete farming supply chain and contributes $155 billion to GDP annually. It also creates wealth that is redistributed within Australia, as opposed to mining profits, which are mostly exported by multinationals that pay little if any tax.
GrainCorp had been pushing for investment by the government to modernise its grain silos and ports network, but the government refused to fund infrastructure improvements.
GrainCorp is the only publicly traded grain merchant in Australia. The company handles 75% of annual grain production and 90% of exports from eastern Australia. It has 280 wheat storage sites, and controls seven of the ten ports that ship grain from the east coast.
ADM, an Illinois-based S&P 500 listed company with revenues of $89 billion last year, already had a 20% stake in GrainCorp but wanted to take full ownership. It was believed to be targeting Australia as a way of boosting its presence in Asian markets, especially China, which is a major buyer of Australian wheat.
The sale would have given Australia's east coast grain handling network to its main international competitor. The decision to block the sale it was not made because then treasurer Joe Hockey had a problem with it, but rather with the timing.
Announcing the decision, Hockey said he had to take into account the national interest. "I consider that now is not the right time for a 100% foreign acquisition of this key Australian business," he said, adding that the industry was "going through transition and now is not the right time to have all the major players foreign owned".
"A further significant consideration was that this proposal has attracted a high level of concern from stakeholders and the broader community," he said. “I therefore judge that allowing it to proceed could risk undermining public support for the foreign investment regime and ongoing foreign investment more generally. This would not be in our national interest."
Shadow treasurer Chris Bowen declared that Hockey was too “weak” to oppose those within the Coalition government opposed to the sale, and showed he was unable to “make the tough decisions”.
"If you want to ensure Australia's food security, then you ensure investment in Australia's food and agricultural industry," he said. "Whether that investment be foreign investment or domestic investment, you ensure investment."
However, Chandler Goule from the US National Farmers Union told the ABC that he had watched the negative impact of foreign takeovers in his own country.
"Any time a group of companies, or one or two companies, corner a market and infiltrate it by 40% to 60%, economists will tell you you've lost competition ... As you lose competition, then what happens to your producers is they're limited on who they can sell to, therefore they get a lower price and your end users are limited on who they can purchase from."
By manipulating public perception of government oversight and responsiveness to community concerns, Australian governments from both sides of mainstream politics have secured broad community acceptance of foreign corporate investment.
In the past, whenever that acceptance has been at risk, governments have responded with measures that address those concerns yet maintain foreign investment flows. Meanwhile, the corporations are buying up our most fertile farmlands and most productive agricultural businesses, speculating in tradeable water entitlements, wasting and polluting our water and closing down our food processing industries.
The debate over new Treasurer Scott Morrison's blocked sale of the Kidman pastoral empire — stock, plant and property — to Chinese government interests is a another good example of a diversion of public debate to serve corporate interests.
It is one of the largest operations in the world — 185,000 cattle in 100,000 square kilometres of pastoral land made relatively drought-proof by being spread over 16 properties and outstations in three states. It produces about 15,000 tonnes of beef each year, including about 1.3% of Australia's boxed beef exports. It encompasses about 2% of Australia's landmass and comprises a complete supply chain from breeding to fattening to market.
It should be bought by the government, kept as a national trust and run as a cooperative network of properties by young Australian farmers and Aboriginal communities who cannot afford to buy into the market.
Instead, the debate is presented by both major parties as being about whether foreign or Australian corporations should be permitted to buy this irreplaceable national asset. The mining industry environmental disaster created by BHP Billiton in Brazil shows that no corporation is different to any other and that none act in the public interest.
Foreign investment review changes
Political grandstanding by the Labor Party alleging that the government's foreign investment review changes are "xenophobic" is cover for the fact that neither political party is doing anything real to control how much rural land corporations are taking over. Neither major party is prepared to act to protect sustainable farms or invest in modernising agricultural infrastructure. They both prefer to lease or sell national assets to corporations so they can make huge profits.
In February last year,Bowen said that the new rules "risk driving investors elsewhere at a time Australian agriculture is hungry for capital. It is inconceivable that Australia will be able to scale up production to expand our food exports and fully tap into the growing consumer markets of Asia without additional foreign investment."
He also claimed that while the ALP supports moves to increase transparency in Australia's foreign investment regime, lower thresholds on agricultural land would be a red-tape nightmare for potential investors.
Then-prime minister Tony Abbott parroted these concerns while supporting the changes as "options to modernise the foreign investment framework to reduce the cost of red tape".
The Foreign Acquisitions and Takeovers Legislation Amendment Act, which passed through parliament in November, enables the Treasurer to either allow, allow with conditions, or block a purchase by a foreign person or company of a significant interest in Australian land. If the sale has already happened and the Treasurer is satisfied it is against the national interest, the Treasury may make a disposal order to unwind it.
One change from the previous law is that the substantial interest threshold for an entity or trust has been raised from 15% to 20%, which means foreign persons or entities acquiring a stake of less than 20% will no longer need foreign investment approval. It is expected that the act will result in a $667.2 million rise in consolidated revenue over four years from application fees.
The only people not to benefit from the changes are the farmers. The new foreign investment thresholds also do not protect any farm in which mining has declared an interest.
The Foreign Acquisitions and Takeovers Act 1975 (FATA) and Australia's Foreign Investment Policy are the main regulators of foreign investment in Australia. Since 1989, FATA has divided Australian land into two categories: rural and urban land. For land to be rural, it must be used wholly and exclusively for carrying on a business of primary production, such as farming, horticulture or forestry. All other land is classed as urban.
This means that, according to FATA, the land supporting an active farm is rural land but the abandoned farmland next door is urban land. Mining on farmland, which farmers do not have the right to refuse, would mean that farmland would not be considered rural land and the review threshold would be much higher. The threshold for review of rural land is $15 million whereas the threshold for developed non-residential commercial real estate remains at $54 million.
Once mining declares an interest in land the price falls well below market value as nobody wants to buy it. Most farms would be lucky to reach those thresholds no matter how viable they were before mining started. It becomes a buyers' market, and again the corporations cash in, unregulated and unreviewed.
In addition, for United States and New Zealand investors, Australia's "free trade" treaty obligations may result in their investment proposals not being subject to these new thresholds.
It is clear that Australia still welcomes foreign investment in agriculture. Instead of moving to ban speculation in water, the Senate standing committee has recommended the expansion of the proposed land register to include foreign investment in tradeable water entitlements.
The Coalition government has ambitious plans for Australian agriculture — as long as it is not expected to commit public investment into it. Agriculture features prominently in the Liberal Party's 2030 Vision for Developing Northern Australia and its fulfilment of those plans will depend on Australia continuing to attract foreign investment.
Corporate mining investment
However, attracting corporate investment in agriculture still runs a poor second to facilitating corporate mining operations. Corporations are jostling to develop Darwin as the terminus of the North-East Gas Interconnector and the hub of a $22.4 billion shale gas development, a monstrous floating liquefied natural gas (LNG) facility and a military service hub for Border Patrol and naval ships.
It is yet to be seen which farmers will benefit from this northern Australian development. No farmer has the right to say no to companies mining their land. In the Northern Territory, pastoralists have no rights at all when it comes to dealing with mining and exploration companies. Mining companies can simply move onto properties without notice that they are arriving or what activities they are planning to undertake, and start digging up ore.
Rivers, local communities and cattle have been poisoned by mining waste and fracking operations were planned within NT national parks.
ABC's Landline reported 90% of all pastoral properties are now under an exploration licence by the mining, oil and gas industry. Mt McMinn Station had a full-blown workers camp and mining operation underway without owner Dan Cahill even being aware they were there. He said they were allowed, just in the exploration phase, to take a bulk sample of up to 200,000 tonnes of ore worth around $20 million from the station to sell to China.
The final straw came when Sherwin Iron built a six-metre-high dam wall, which collapsed during the wet season and flooded the highway. Cahill does not know how many cattle were lost. The Environmental Protection Agency has since found out that Sherwin Iron did not wait for drainage pipes to arrive from Darwin because it was in a hurry to complete the wall.
Cattle farmers have been lobbying the NT government for years, to bring in mandated access agreements, but the Australian Petroleum Production & Exploration Association (APPEA) and the Minerals Council refuse.
APPEA's Steven Gerhardy said: "Putting something forward in legislation is difficult, in that it could reduce the flexibility available to both parties to tailor an agreement that suits them. Voluntary agreements, we think, work best."
And in Australia, it is what the corporations think that matters.