The farm lobby panders to delusion

I’ve just finished listening to the ABC’s Waleed Aly interviewing Jock Laurie, president of the National Farmers’ Federation, on the newly-announced register of foreign investment in agricultural land. (You can listen to it too, here.)

Laurie’s position was effectively: “We know our members are panicking needlessly about a foreign land grab, but try telling them that.”

The register is pretty silly: we have ABS statistics on foreign ownership, which apparently (feel free to correct me) say that 89 per cent of local agricultural land is fully Australian-owned. We don’t really need anything more than these sorts of numbers.

But as Laurie acknowledged over and over, a lot of country people don’t believe the numbers. Spurred on by the normal low-quality rural policy debate, they talk about a vast Chinese buy-up. As Laurie himself noted, if everything he’d heard was true, half the country would already have been sold to foreigners.

The interview made clear that Laurie thinks the rural people worrying about a Chinese land grab are delusional. The ABS statistics are right, and the fears of a foreign takeover of Australian food are ridiculous. But Laurie couldn’t come out and say that his members are delusional; he’d be out of a job. So instead he used about a dozen variations on “let’s have the debate” and “at the moment the discussion is not based on fact” and “I don’t think it hurts to ask the question”.

At the same time he pointed out that the NFF have “never said that there is a problem” with foreign investment in agriculture. And he noted, correctly, that the industry has always been fed by overseas money.

The creation of the agricultural land ownership register is one of those seen-to-be-doing-something moves with just two points in its favour: it won’t do much real damage, and it might bring some more attention onto the realities of foreign investment.

But I was surprised to find when I checked news reports that the NFF is credited with lobbying for the register to be created. Jock, mate, any chance you could have organised to get some decent information to your members in the first place, and saved some poor Treasury bureaucrat all the trouble?

In short, the farm lobby’s lousy public policy standards persist. The sector spends an amazing amount of time on issues that aren’t really issues at all.

Polite, detached scepticism about your membership’s delusional beliefs is, I suppose, step up from sharing them. But it’s a long way from the best we might expect from organisations like the NFF. (Think of the hard truths the ACTU told its members in the 1980s.) It takes a deal of cynicism to lobby for a measure you can only justify on the basis that your members are too ill-informed to know better.

Update: Here’s one lawyer’s assessment of the likely costs of creating an agricultural land ownership register. Short version: greater than you’d think).

About David Walker

David Walker runs editorial consultancy Shorewalker DMS (shorewalker.net), editing and advising business and government on reports and other editorial content. David has previously edited Acuity magazine and the award-winning INTHEBLACK business magazine, been chief operating officer of online publisher WorkDay Media, held policy and communications roles at the Committee for Economic Development of Australia and the Business Council of Australia and run the website for online finance start-up eChoice. He has qualifications in law and corporate finance. He has written on economics, business and public policy from Melbourne, Adelaide and the Canberra Press Gallery.
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Pappinbarra Fox
Pappinbarra Fox
9 years ago

Yes good points David, but educating a community about the facts and actually having them understand and believe the facts and consequently change entrenched views of the world are two distinct societal parameters, which, although you hope that they would, seldom do cross over or follow each other. As you rightly point out about the Unions – there are many today who still rue the changes initiated by Hawke and co.

The Feral Abacus
The Feral Abacus
9 years ago

I was appalled by Laurie’s insistent portrayal of the ABS data as not being ‘fact’, and by his intimation that rural anecdote was somehow a far more reliable source of information than survey data.

Paul Frijters
Paul Frijters
9 years ago

David,

I of course completely agree with you on the merits of the case but there is the tricky general issue of how far a ‘leader’ can walk ahead of his congregation and remain a leader. As Machiavelli very explicitly pointed out, a leader needs to be seen to share the social norms and beliefs of his flock or else he will not be leader for long. If you doubt this, just ask yourself if you believe whether all the former US presidents were really religious or whether some will have been unbelievers who felt they had to pretend to be religious for the sake of their career…..

Yet, of course, even if it is a leader’s duty to go along with lies he cannot challenge, it would still be our role to heckle him for it.

perplexed
perplexed
9 years ago
Reply to  David Walker

I heard the interview and would describe Lawrie’s responses as ‘stone-walling’ or walking both sides of the street. Remember Lawrie was previously a long time NSW farmers head There are just so many internal threats from a variety of producer groups to stay within the fold (eg dairy farmers) that Lawrie feels he needs to cover himself. Compare his approach with his NSW successor on opposing coal seam gas exploration for example.

Cameron Murray
9 years ago

David,
Basically your post assets two main points, then argues that farmers are fools for not believing them.

1. Foreign ownership of agricultural land, or of Australian assets in general, is not a problem by any definition.

2. The ABS has good data, therefore the farmers should ignore the anecdotes from their local area.

On the first, I guess the smart-arse answer is that you would never know unless you had the data. Also, if you ran national balance sheets rather than GDP as measures of national economic performance, selling assets to foreigners wouldn’t be such a flash decision. So I personally don’t see why asserting this belief from one strand of economics helps the discussion about a foreign ownership register.

Indeed, you have to ignore a lot of international economic and political strategy (currency manipulation etc) really buy into that belief.

On the second, the ABS figures are from a once-off survey of 11,000 agricultural business out of a population of 135,000 in the ALWOS.

They find that somewhere between 966 and 1622 of the 135,000 are foreign owned.

Now, would you trust a once-off survey of a very heterogenous industry to be indicative of anything? You don’t believe that tracking the changes over time would be a valuable contribution to future policy? Is there any case where having less data about an issue helps guide better policy?

As a side note, the apparent confusion about whether farmers like or dislike foreign investment seems to boil down to two factors. First, foreign owners can bid up prices for land. That is good for current land owners. Second, foreign owners might come into a particular agricultural industry and invest heavily in new equipment, improving the productivity of their land, and increase competition. That is bad for current land owners, but goods for society.

The second point might be why the presence of foreign land owners seem to be the most talked about on the farming grapevine, and lead to perceptions that don’t align with reality.

For me, a register of foreign ownership seems like a good thing.

Thomas the Tout
Thomas the Tout
9 years ago

Occasionally my mind returns to this issue; an issue that worries me.

What is a society? Perhaps an alliance of people working for their own good, and that of others.
What if a person comes to your neighbourhood and works only for his benefit alone? ( Was the Vestey Group welcomed by the aboriginal ‘owners’)
If we weaken our society by allowing the self-centred, will it go so far as a breakdown of society?
Are we trying to regulate our social structures (includes property rights) with laws that hark from the era of sailing ships?

It seems to me that the farmers are worried about their society. That is something that not all coalition MPs would know of, and very few ALP. In turn, the commentators talk about very different concepts – balance of trade; guns and butter; level playing fields… .
Are we going to have economists tell us how a community works? Not if I can help to stop them.

Elise
Elise
9 years ago

Cameron, that was a really telling point:

“the ABS figures are from a once-off survey of 11,000 agricultural business out of a population of 135,000 in the ALWOS.”

In a heterogeneous population of businesses, that could introduce a significant sampling error. And as you say, a snapshot doesn’t give you a good indication of things like rapidly-changing trends.

As such, a transparent readily-accessible register would be useful. Especially if it is regularly updated.

TN
TN
9 years ago

Actually, its not a very telling point at all. The sample size (11 000) is very large. The heterogeneity of the population of course means that the sample mean will less precisely match the population mean, but it would take some absurdly far fetched assumptions to maintain that foreign ownership is anything but minor.

Yet those are the types of assumptions that the some farmers are unwittingly happy to make (abbetted by polies such as Jocye and industry leaders like Laurie) .

It is base economic xenophobia looking for an empirical fig leaf, and deserves the short shrift that David Walker gave it.

l

Cameron Murray
9 years ago
Reply to  TN

The survey is good. 11,000 is a great sample. And we need nothing more than a single data point to make good policy? One single data point I suspect you would have said back in 2009 that we didn’t need anyway?

Sounds like faith-based economics.

The Feral Abacus
The Feral Abacus
9 years ago
Reply to  Cameron Murray

Cameron, that ‘single data point’ is more useful than you acknowledge. Farm businesses don’t change hands very frequently, and foreign interests are unlikely to be interested in anything other than the largest ones. So the change from Australian ownership to foreign ownership will have been a small percentage of a small percentage. The current ownership levels will not be appreciably different from those at the time of the survey.

Cameron Murray
9 years ago

I don’t know.

Let’s say foreign farm ownership was 1% in 2001, 3% in 2005, and 12% in 2009. I think we know a lot more about the changes happening in the agricultural sector with that information.

Also, you suggest that foreign owners will only be chasing the largest businesses. Which seems to me to suggest that the rate of change from Australian to foreign owned can be relatively fast. For example, take a look at this graph derived from ABARE’s report.

Doesn’t give me confidence in that single data point, nor you conclusion that “The current ownership levels will not be appreciably different from those at the time of the survey”. Hence the need for better information.

Cameron Murray
9 years ago
Reply to  TN

If you would like a more detailed understanding of my view, try here

The Feral Abacus
The Feral Abacus
9 years ago
Reply to  Cameron Murray

Cameron, in response to your 9:08 am comment.

There are some historical data: point 12 in the ABS explanatory notes lists them. Admittedly there will be some difficulties in making comparisons due to differing methodology etc.

Your graph of the 2001-2010 Qld ownership data shows a large % change off a very small base. The 2010 figure of 4,500,000 Ha needs to be seen in the context of their being 138,706,000 Ha of agricultural land in Qld. So we are still talking about a quite low level of foreign ownership in 2010.

I see the data source was DERM; is that Qld or Federal? Also, do you know whether they changed their methodology after the 2008 survey/census?

The Feral Abacus
The Feral Abacus
9 years ago

It’s reasonably well established that the levels of foreign ownership are low, and that some of the more dramatic claims from the rural sector are unjustified. Given that ownership turnover is slow, I’d say it would be a more efficient use of public funds to repeat the ABS survey at 3-5 year intervals (and using a stratified random sampling scheme, if that isn’t already in place), rather than going to the expense of establishing a national register.

Cameron Murray
9 years ago

DERM is the QLD State agency in charge of land titles (amongst other things).

Now that we agree that more data is better, the question is which is better value – the register or repeated survey’s of 11,000+ businesses.

I admit that I don’t know what sort of costs are involved with each. Could the register be compiled from a single question on a form that is already used to transfer ownership? Seems low cost to me.

Steve at the Pub
9 years ago

I’d question the methodology of the ABS survey. It measures data only from those who responded.

It defies belief that intelligent people accept that as the only measure this nation ever requires to keep track of foreign rural land ownership.

Clearly anyone arguing against a register has a deeper (likely more sinister) reason for opposing one.

The current data sux. That is indisputable.

What a register will do is allow the population to see in real time changes to the level of ownership. A sharp jump upward would likely be most unpalatable for whichever government is in power.

Rural industry isn’t on the horizon for most Australians, this applies equally to the informed & political class. Thus they miss many of the nuances & events that are reported, and carry on like it is a big discovery that has not been previously reported upon when something blows up into a big story.

That applies very much in the case of a register of foreign land ownership.

Obscured by the hoo-haa over Cubby station, is the significant matter of who will get the land to be released in the next stage of the Ord River scheme.

The current federal government seems to badly want to hand what will be a significant chunk of value added northern irrigation land to “the chinese”. This will not go down well politically in Australia.

Easy to see why some would not want a National Register.

The Feral Abacus
The Feral Abacus
9 years ago

“I’d question the methodology of the ABS survey. It measures data only from those who responded.”

That is a red herring, SATP: the response rate was 92%. http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/7127.0Explanatory%20Notes1December%202010?OpenDocument

Steve at the Pub
9 years ago

You’re thinking statistically.
Imagine this statistic: How many foreign owned operations threw the survey (into foreign ownership) into the bin?

I struggle with the reasoning behind the methodology.

The Feral Abacus
The Feral Abacus
9 years ago

“How many foreign owned operations threw the survey … into the bin?”

Likely about as many foreign owned operations that ignore their tax obligations. Don’t forget that these businesses are legally obliged to respond under the Census and Statistics Act 1905, and I’d expect the great majority of new foreign businesses would be looking to keep things sweet with their host country’s govts.

paul walter
paul walter
9 years ago

I suppose it comes down to a peculiar conflation of “ownership” to “investment”.
Investment is fine, the problems begin when ownership and control and with this, the capacity to meddle in local affairs for self interested reasons.
So- finally- investment, yes; ownership, no.

paul walter
paul walter
9 years ago

I should suggest that this conflation is largely careless or incidental slippage, other wise it would infer aggressive neoliberal policy, which is really a neo colonialist pig wearing lipstick policy, a botoxed anti civil society pup sold through marketing for the benefit of vested interests.

john r walker
john r walker(@annesanders)
9 years ago

worthy of Keating

john r walker
john r walker(@annesanders)
9 years ago

sorry –

neo colonialist pig wearing lipstick policy, a botoxed anti civil society pup

paul walter
paul walter
9 years ago
Reply to  john r walker

Don’t you have a soul?
At last, unshackle the wretched prosaic thing, let it wing free on the thermals of your imagination, john r walker.

john r walker
john r walker(@annesanders)
9 years ago
Reply to  paul walter

:-)

paul walter
paul walter
9 years ago
Reply to  john r walker

Yes, my friend…meaning and value!

murph the surf.
murph the surf.
9 years ago

I agree with everything you say Steve but isn’t the open market the place to decide value and price?
Keep the register and analyse it as necessary so that a more informed debate can occur.
The Kimberley proposed sale hasn’t really attracted much attention so far but as with Cubby good luck to whoever buys this set of assets.
Agriculture in northern Australia has often been battered by the environment.The lesson would seem to be that monocultures are very susceptible to attacks which haven’t even been imagined in this region.
Apart from drought.
Cubby was for years a major drama as lots of government funding was involved.
http://www.crikey.com.au/2012/09/05/why-the-coalition-should-again-sack-joyce/
There is every reason to suspect that these investors may be succumbing to hubris- the narrative about Australia being a food bowl, our aims should be value adding for export ete etc.The $A is high and this creates the illusion that this period of massive overvaluation of the currency will persist well into the future.These investors may also be using funds which have evolved out of very easy credit in other countries.All these elements are a considerable risk if circumstances change
We could well buy these assets back in few years for a very reasonable price. As a favour to the industry of course and to retain skills and jobs in areas where they are needed…..or something like that.

john r walker
john r walker(@annesanders)
9 years ago

Mostly agree , Australia has a very unreliable climate and only about 5% of our soils are arable by world standards.
There is a caveat – Australia has some of the least polluted food production areas in the world, china has a growing middle/upper class that will pay extra for food with less melamine in it .

Steve at the Pub
9 years ago

Where does marketplace come into it? We’re talking admin, not economics.
A register is simply that.
There is already a register of who owns what land.
How difficult would it be to keep a sub-register of foreign owned land?
What harm could it possibly do?

When you say the Kimberley “sale” hasn’t attracted much attention so far, you mean it hasn’t attracted much attention from urban-centric reporters & (cough) intelligentsia.
Why does there have to be a “sale”? What is wrong with settling the next stage of the Ord the same as every other stage?

murph the surf.
murph the surf.
9 years ago

sorry that link to poor old Barnaby is not the right one.
.
http://www.melaleucamedia.com.au/01_cms/details.asp?ID=35
Is more to the story about Cubbie.

paul walter
paul walter
9 years ago

What you say Murph the Surf, could be right if all factors rather than narrow individual self interest and profitability, such as environmental impacts that jeopardise the over all economy, were taken into account.
The original closing of Cubby was a right reflection on those factors that commercial market economics always for some strange reason, ignores or disallows.
No doubt the surrender of environmental imperatives from the mix comes from some obscure clause in a secret free trade agreement hidden from the public that renders it a toll of a type of neocolonialism.

The Feral Abacus
The Feral Abacus
9 years ago

Cameron @ 9:37 am. “Could the register be compiled from a single question on a form that is already used to transfer ownership?”

I doubt that the costs of continuously running & reporting on a national register would be lower than occasional surveys. One of the other problems with registers is slippage – the stuff that falls of the radar & doesn’t get chased up. But ultimately I’d say recent experience shows that more/better data are not the answer: it’s clear that where data contradict anecdote, many people would rather undermine the validity of the data than revise their beliefs.

One would expect DERM to be a reliable data source, though I’m still wondering whether they made some change to their ownership classifications post 2008.

paul walter
paul walter
9 years ago

Well, john r walker, it does stand to reason that generally, someone living somewhere else as an absentee landlord will have less concern for a local environment and community than locals who build a community and depend on good management of an environment- sorry, non-market economics again, sustainability is for long term productivity which surely also count.
So ,global capital has introduced “Free
Trade” in the form of hidden deals, that ensure an artificial, subjective balance toward investors at the expense of other stake holders is imposed. We see the result of slanting in the way processes like gas fracking and agriculture cash crop monocultures are applied in ways that privilege a small group over everyone else on contested abstract sociological and pol theoretical grounds.

john r walker
john r walker(@annesanders)
9 years ago
Reply to  paul walter

?
Australia is full of country that was thoroughly wrecked by us ,in the good old agrarian socialist days.

paul walter
paul walter
9 years ago

Just imagine what a better job will be done now and in the future, given the advance of knowledge.
I guess it is true that much damage was done earlier, out of ignorance.
Probably much more more will caused by it, and pig headedness, these seem the constants.
I would rather have a ghost’s chance of stopping vandalism than none at all.
Question of containability.

paul walter
paul walter
9 years ago

The Feral Abacus…mark this person!