Australia-China FTA will boost Aussie agriculture and dairy sectors: Experts

The Free Trade Agreement between Australia and China signed in June, and now awaiting the endorsement of parliament will be a significant milestone in the expansion of Australia’s agriculture sector, according to experts.

Sensing the fine prospects of the FTA, China’s Beijing Capital Group and Australia’s Yuhu forged a joint venture with US$3billion (AU$4.21 billion) investment in Australia’s agriculture sector. Though the duo is yet to make their first purchase plan as a joint company, negotiations are on with Australian cattle companies to create supply chains, ranging from Australian cattle stations to Chinese supermarkets.

One of the areas to get a big boost from the FTA will be the dairy sector. According to Dr. Jeffrey Wilson of the Murdoch University, China has high level of interest in Australia’s dairy products.

In 2014, Chinese company Ningbo Dairy bought a couple of adjacent farms in the farming hamlet of Kernot in southeastern Victoria and combined two properties under the name Yo You Dairy.

“The Chinese/Australia FTA will increase the interest in Chinese companies to start looking at these Australian companies because the FTA opens up those channels that would allow them to sell in the Chinese market,” added Wilson.

China’s rising population as well as its concerns over the safety of Chinese dairy products has paved the way for a thriving market in Australia, noted Martine Letts, head of the Australia China Business Council. According to Letts, while Australia needs investment, China needs products. That is a win-win situation for both the countries.

Pro-FTA sentiments

Though Australia is facing mixed reactions at home about the China FTA, a momentum is building up in favour of the FTA. Recently, the Australia-China Relations Institute endorsed the deal.

According to ACRI deputy director Professor James Laurenceson, his agency’s analysis is that the agreement “changed little in the way that existing legislation treats overseas workers.” In five years, no one would notice the difference and there would be no complaints about the agreement, the ACRI official said. According to him, China’s economy will expand by 44 percent and Australia would only benefit by being part of that growth story through the FTA mechanism.

More Chinese investors

Meanwhile, Chinese investors are turning to the aAussie agriculture sector and have become the largest investors in Australia’s agricultural sector in 2014, according to Foreign Investment Review Board.

China poured AU$632 million, which is twice the investment in the year before, The Wall Street Journal reported. At the same time, Chinese investments into the Australian mining projects crashed by a third to AU$5.85 billion, during the same period.

More and more Australian agriculture investors are getting good response from China. The Seafarms Group is seeking offshore investors for developing a AU$1.45 billion prawn farm in the remote northwest. Nearby, there is the Chinese company Shanghai Zhongfu, spending AU$700 million to launch a sugar and sorghum farm.

A private Australian company, Integrated Food and Energy Development, is also pitching a project to offshore investors for converting its five cattle stations in Queensland into a AU$2 billion enterprise for producing sugar, guar beans and cattle.

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