Tag Archives: green
Increased Farm Buyer Scrutiny Likely
22 Oct, 2013 JOHN KERIN THE Abbott government’s plan to increase scrutiny of foreign farm purchases looks set to pass the Senate despite a simmering internal Coalition row over Chinese investment. The Greens and Democratic Labour Party senator John Madigan have backed the Coalition’s plan to lower the threshold which triggers scrutiny of foreign farmland purchases by the Foreign Investment Review Board (FIRB). This gives the Coalition the numbers it needs to pass the legislation through the Senate. The Greens and Senator Madigan both want a lower threshold than the $15 million outlined by Prime Minister Tony Abbott in his pre-election foreign investment policy. Labor has so far indicated it does not support lowering the threshold. Liberals and Nationals are divided over increasing the threshold to $1 billion for China in an effort to clinch a free trade agreement. Mr Abbott says he wants to sign a free-trade deal with all three North Asian powers, China, Japan and South Korea, within 12 months. Government sources suggest the government would be better off passing the legislation before a new Senate, where views on foreign investment are much more uncertain, is sworn in on July 1 next year. Mr Abbott released a foreign investment policy ahead of the election which said the threshold of $248 million which triggers a review by the Foreign Investment Review Board would be reduced to $15 million. The policy included plans to establish a national register to keep track of foreign-owned land holdings. The policy was reaffirmed by Mr Abbott and Agriculture Minister Barnaby Joyce during the election campaign. The policy has largely been driven as part of a response to growing community anxiety over perceived high levels of foreign land ownership in Australia. Treasurer Joe Hockey indicated the Abbott government could increase the investment threshold to $1 billion if China was prepared to enter in to a free-trade deal with Australia. Key Nationals, including Mr Joyce, and New South Wales Senator John Williams, are staunchly opposed to doing a special deal for China. They argue profits will be lost to Beijing, rather than supporting local Australian communities. Senator Madigan said on Monday that “any investment in Australian farmland should be vetted”. “You can buy a pretty big plot of highly productive rich arable land in parts of Australia for $15 million,” he said.Alarm bells He said given at least 11.3 per cent of farmland was foreign-owned, “it should be ringing alarm bells for those in government and in opposition”. “We should not be selling out the farm to suit vested interests,” he said. Greens Leader Christine Milne said her party favoured lowering the FIRB trigger to $5 million and a tough national interest test. “We shouldn’t sell any land and water to a wholly owned government subsidiary at all and in relation to corporate purchases there should be a threshold of no more than $5 million,” she said. Senator Milne said countries were buying up productive land around the world to ensure they had a source of food when climate change-induced food shortages inevitably occurred. “It is no longer about trade, but survival,” she said. Senator Milne said the Greens would propose their own foreign investment bill when parliament resumed in November. Continue reading
‘Deep-Pocketed’ UK Land Investors Hit 3-Year High
The number of large investors queuing to buy UK farmland has hit its highest in three years, but demand is focused on high-quality arable operations, whose premium over low-quality grassland continues to increase. Savills, the land consultancy, said that the number of investors with £5m-10m to spend on farmland had risen to its highest quarterly total in three years, some 13% above the average. “There has been an increase in the number of applicants who have deeper pockets for buying farmland”, said the group, which has investors with some £6bn to spend on farmland on its books. “A large proportion of these funds will still be available into next year,” given the shortage of farmland for sale, with the supply of 128,000 hectares in the first nine months “historically low”, the group said. What is in demand However, buyers were focused on high quality arable farms, particularly in the east of England – a factor reflected in price growth which has hit 8.5% in the January-to-September period, taking average values nearly to £8,300 an acre. That includes growth of 2.3% in the latest quarter. “What they want is top quality, big farms, that will give them price appreciation and a bit of yield,” Ian Bailey, Savills’ head of rural research, told Agrimoney.com. “They are looking for big blocks of arable land. It is that market which has been doing best.” Regional gap However, there were differences within the market, with investors preferring the east of England which government data last week reaffirmed as the best yielding for wheat, with an average of 7.9 tonnes per hectare. That increased its advantage over wetter western areas, which were hurt particularly by the wet spell in 2012 and in the early months of 2013, with north west yields this year averaging 5.4 tonnes per hectare. In the land market, while prime arable farms in the east of England land appreciated by 4.6% in the July-to-September quarter, the market in western areas, including Wales, stagnated. Indeed, in Wales, research “indicates no change in prime arable values since December”, leaving them at about £7,000 an acre. ‘Really sluggish’ In the market for smaller and grassland farms too, and those where residential assets make up a large proportion of the overall value, activity “is really sluggish”, Mr Bailey said. “For a stock farm of 150 acres, you are probably looking at sub-5% price growth, compared with 8-10% for the top end.” The group said it was “comfortable” with its forecast for farmland values overall rising by 8.8% this year, but acknowledged that prices of top arable operations, and “the best” dairy farms, would see stronger growth. Continue reading
Farming Investments In Romania Are About To Become Less Risky
Balkans.com Business News Correspondent – 21.10.2013 Farming investments in Romania are about to become less risky after the first agriculture mutual funds – which will take on the risks insurers do not cover – become functional in 2014. This will not only help stabilize farmers’ incomes in the event of calamities, but is also expected to lead to more favorable financing conditions. Mutual agriculture funds will become operational in Romania from spring next year, agriculture minister Daniel Constantin told BR last week. While the model is a first for the local market, it has a strong background in Western Europe. In Romania, the need to set up agriculture mutual funds has long been debated and has become more pressing in the context of climatic disasters such as last year’s drought, as well the more recent food safety scandals. importance of these funds stems from the fact that they essentially act as income stabilization tools which provide farmers with financial compensation for economic losses caused by such events as adverse weather and environmental calamities. Losses incurred due to such events are not covered by insurance companies. Had such funds been in place last year when the drought slashed farmers’ revenues, their shortfall would have been covered, explained Constantin last week during a Bursa conference. Economic deficits generated by price variations, as has happened this year after grain prices dropped following high production, could also be covered by the funds. Since Romania finally adopted EU legislation on agricultural mutual funds this summer, two local farmers’ associations have already announced they have begun procedures to set up such entities. The first was the National Federation Pro Agro, which was followed by the League of Romanian Farmers’ Associations (LAPAR). Under the current law, mutual funds can be set up as non-governmental organizations whose running costs in the first three years are covered by EU funds. Any local farmers’ organization can set up a fund but one of the main conditions is that its members represent at least 30 percent of the country’s farming surface area. Constantin told BR that under the current law, up to three such funds can be set up but that he hopes, and is willing to help mediate, that in the end only one fund will be created as this would make it stronger. However, no matter how many funds are founded, what is important is for farmers to join one. “Membership is voluntary (…). Farmers will have to choose between the mutual funds available on the market at that time. On the other hand, there is an incentive for every farmer receiving subsidies to join a mutual fund by reducing the subsidies from the national budget by 80 percent,” Pro Agro’s president, Alexandru Jurconi, told BR. Once farmers understand the benefits, they will join, even if this happens after they are faced with loss-generating situations, commented Constantin. The main purpose of setting up such funds is to reduce risks for farmers, but they should go onto generate other improvements such as easier access to financing and ultimately even cheaper bank loans. Membership of a mutual fund is an additional guarantee for banks that major agricultural risks – adverse weather, animal disease, environmental accidents and all the economic losses these cause – are covered. This will automatically lead to better financing conditions, explained Jurconi. Moreover, members of an agriculture mutual fund could also benefit from lower insurance costs. Agriculture mutual funds will be complementary to the products insurance companies offer farmers. However, the mutual fund will be able to negotiate insurance costs for all its members which should lead to more favorable insurance policies for farmers, added Pro Agro’s president. The cost of benefitsThe funds will mostly draw on public sources – 65 percent of the compensation will come from the state and EU funds, and the remaining 35 percent will represent members’ contributions. The amount of money farmers contribute to the Pro Agro Agriculture Mutual Fund will vary depending on the risks covered. For basic risk coverage the level will be affordable for all members, regardless of their size, said Jurconi. “Of course, for special contingencies, especially when we talk about calamities, the contribution level will be different as the compensation payable in the event of losses will be substantial,” he added. Regardless of the level of the contribution, the sums farmers pay will be capitalized and, in the absence of financial compensation, can be withdrawn. Where land for which a contribution was paid is sold, the buyer will receive all rights of use, including the subsidy and the contribution to the fund. Pro Agro says it will start with some 1,300 members, accounting for more than 4 million hectares of farmland. This should change by the end of the first year of activity given the incentive to join a mutual fund and the setting up of other such funds. Better late than neverAgricultural mutual funds could have been set up in Romania as early as 2007, the year the country joined the EU. Had this been done, the local agriculture sector might have looked very different from how it does today. But now that things have finally been kick-started and farming is about to become a less risky business in Romania, more concerted and long-awaited effects could be seen in the years to come – easier access to financing, a better capacity to absorb EU funds and in the end a more competitive agriculture sector. Business Review Romania Continue reading
