Wednesday, 18 January 2012

Those Nasty Foreigners - Buying Our Farms!

Foreigners have been buying Australian farm land.  About 11% of it apparantly.  It is generating some heated discussion which is not helped by commentary along the lines:
  • “Foreigners now dominate Australia's key food processors and own a tenth of the nation's farmland and irrigation water, escalating a political brawl yesterday over "selling the farm”.

 It’s almost universally portrayed as a bad thing.  It creates a sense of insecurity with implications that these foreigners will grow all the food here, ship it back to the mother country and leave us poor Aussies starving.  At least I think that’s the concern.

The discussion misses a few critically important facts.

Perhaps most importantly, the true-blue, dinky-di Aussie farmers who sell their land presumably do so for financial reasons.  They receive an offer, presumably it's high or else they wouldn't sell.  Indeed, it looks like those offers from foreigners to the farmers have been generous enough to tempt a lot of farmers to sell.  There is no compulsion, no directive to sell the farm, nothing like it.  Presumably the Aussie land owning farmers get an offer they can’t refuse.  And like sensible people in those circumstances, they take the money and run.

I wish someone – even a foreigner – would make me an offer I can’t refuse!

What if such foreign purchases were banned or restricted?  Those Aussie farmers would be worse off, and would simply rely on other farmers or some local person stumping up a bucket of cash for their land.  I suspect they wouldn’t be offering the same amount as these foreigners.  So selling land to foreigners is actually a good thing!  

1 comment:

  1. At a micro level you are correct Stephen. But at a macro level the aggregation of rational decisions by individual parties does not always lead to optimal outcomes.

    The bigger question is, how can foreigners afford to buy our farmland, and why aren't we buying any of theirs? Alternatively, if they are such attractive investments, surely there would be some local demand for them.

    I feel you have intentionally ignored a larger international political-economy debate here, which is the one we should be having.