As nations awaken to the growing danger of food shortages worsened by climate change, they have started reinvesting in agricultural research and development to create greater food security for their own people. Unfortunately, some countries are focused on short-term benefits, courting investment for investment’s sake and ignoring the long-term consequences.
The news has been full of stories in the last few years about foreign nations and companies buying up farmland in developing Latin American and African countries, many of which have trouble feeding their own people. These foreign buyers use the land to grow food that they then ship back to their own countries to enhance their food security. The developing countries selling their farmland receive a little money but no improvement to their own food security.
Some developed countries are making similarly poor choices.
Between 1984 and 2010, the amount of agricultural land in Australia owned in whole or in part by overseas companies and investors nearly doubled to 11 percent nationally. In South Australia, foreign ownership almost tripled to 12 percent. In the Northern Territory, it grew from 18 percent to 24 percent.
In early 2009, Australian billionaire James Packer sold 17 cattle ranches in northern Australia with a land area larger than that of The Netherlands for A$425 million to Terra Firma, a British company.
Other foreign companies like Westchester Group Investment Management, Inc. of the United States, London-based Anglo-Australian Southern Agricultural Resources, COFCO Group of China, and Thailand’s Mitr Phol Sugar Corporation are also spending millions of dollars buying up Australian farmland, ranches, and vineyards.
Australia is the world’s second largest exporter of wheat, after the United States. Half of Australia’s 23 licensed wheat exporters are owned by foreign companies.
Why are foreign buyers and investors interested in farmland in a country that is the driest inhabited continent on the planet, one that has been besieged in the twenty-first century by drought? One viable reason must be short-term memory loss. A second is actually the decade of drought, because it sent agricultural land prices plummeting between 20 and 50 percent, depending on location, since late 2007. Cheap land prices are always appealing to investors.
Also luring buyers to Australia is La Nina, which ended the national drought last year with plentiful rains that helped beleaguered farmers produce bumper crops two years in a row.
Many of those farmers are still selling their land. Battered by drought and floods, they are often grateful for the money they receive for farms that have been in their families for generations. Their children, who watched the economic and emotional toll climate change took on their parents, are choosing different careers and leaving the land. Offered millions of dollars in exchange for back-breaking work and global warming-induced stress, they and their parents are selling.
The Australian Bureau of Agricultural and Resource Economics and Sciences, known as ABARES, enthusiastically supports these sales to foreign buyers and investors, as does Australia’s national government, which issued a report in mid-January 2012 insisting that foreign investment in agriculture boosts the nation’s farm production and creates rural jobs.
Unlike the buyers of farmland in many developing countries, Australia’s foreign buyers and investors are more interested in profit than shipping food back home to their own people. But, as climate change accelerates, that could easily change. These companies may soon be forced to answer to national concerns about food security. In the next few decades, foreign-owned Australian farm and ranch land could be “conscripted” to produce food for China, Thailand, Great Britain, even the United States instead of growing food for sale to Australian and international markets.
Australia has approximately 2.96 million square miles of land of which just 6.5 percent is arable land, according to the World Bank.
How much farmland can Australia sell before it finds it can’t feed its own people?