Notes from New Zealand: China’s Investment in NZ Agriculture and a Bumper Crop for Grapes

CLF Director Robert S. Lawrence, MD, is on sabbatical in Auckland, New Zealand, where he is studying the country’s agriculture system.

As we waited in the Sydney airport for our connecting flight to Auckland, I picked up a copy of The Australian, one of the major newspapers in Australia, and noted an article titled, “China hungry for local food assets.” The article noted that China was preparing a multi-billion dollar investment campaign to acquire Australian agricultural lands to provide farm produce over the next five years. My thoughts went racing back to Lester Brown’s Who Will Feed China: Wake-up Call for a Small Planet, published in 1995 and arguably the single most important book in shaping the strategies of the early years of the Center for a Livable Future. Brown exposed the myth of Chinese grain self-sufficiency and predicted that China would soon become a major food importing country as water resources were depleted or diverted to the booming industrial sector; rising standards of living would shift dietary choices to a higher meat, western diet; and increasing amounts of grain would be diverted from direct human consumption to animal feed.

Grape VineyardThe Australian reported that in the last six months there has been a dramatic increase in the interest of Chinese buyers in purchase of segments of the agricultural sector “with the sweet spot being in ‘under the radar’ private farms, aggregation and processing businesses worth between $10 million and $200m.” Why this range of enterprise? Because under Australian law the Foreign Investment Review Board is limited to investigating sale of businesses to foreign enterprises that are worth more than $231 million. So a partial answer to Lester Brown’s question of who will feed China is a loose consortium of Australian agricultural resources, each valued at less than $231 million.

The Chinese buyers are showing particular interest in grain, meat, and wool opportunities. To date the majority of China’s investments in Australia’s agricultural sector have been less than $10 million with examples cited of dairy farms, orchards, vineyards, and Tasmanian spring water. But China’s appetite is growing with reports of one Chinese company looking for 5000 hectares (about 12,500 acres) of grain production land, worth about $75 million on the current Australian market.

The government of Australia has responded by launching a parliamentary inquiry into foreign ownership of Australian agriculture, all reminiscent of Russia’s decision last summer to ban export of wheat after their record-setting drought, India’s restrictions of rice exports in 2008, and other signs of countries protecting their domestic supplies while remaining a player in the global food market. Read More >