Cattle Farm

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
In making a preliminary decision on the sale of S. Kidman &amp; Co to a Chinese consortium, the Treasurer Scott Morrison has shed some light on what the government defines as being in the “national interest”.
He describes the Chinese bid as being contrary to Australia’s national interes<a href="https://sjm.ministers.treasury.gov.au/media-release/050-2016/?utm_source=wysija&amp;utm_medium=email&amp;utm_campaign=Media+Release+-+Preliminary+decision+of+foreign+investment+application+for+purchase+of+S.+Kidman+%26+Co+Limited">t</a>, because:
“the form in which the Kidman portfolio has been offered as a single aggregated asset, has rendered it difficult for Australian bidders to be able to make a competitive bid.”
The decision was rationalised not on any of the pre-existing national interest test provisions, but rather the fact that Australian companies had struggled to make a competitive bid.
By doing this, the Treasurer has articulated a new policy objective, not previously part of the national interest test: that an Australian firm should have a substantial stake in the bidding process.
<h2>How is national interest defined?</h2>
The consortium bid for Kidman, the largest private land holding in Australia, was subject to approval by the Treasurer and the Foreign Investment Review Board (FIRB). All investments which are screened by the FIRB are subject to a “national interest test”.
The specific content of this test is not legislatively defined, and is decided on a case-by-case basis according to the judgement of the Treasurer. However, the FIRB does provide investors a set of ‘guidelines’, which outline five factors that are usually considered. These include: national security, competition policy, other Australian government policies and regulations (including environment and tax), the impact on the economy and community as a whole and the character of the investor.
There are also an additional set of six guidelines for the agricultural sector, which cover issues relevant for this industry such as land access, biodiversity, productivity and employment.
These guidelines were most recently re-issued in December 2015. However, they have remained relatively unchanged since the last major revision by the Rudd government in 2008, which was made in the wake of Chinalco’s intervention into a proposed BHP-Rio Tinto takeover. Significantly, none of these provisions express a requirement for local ownership in the agricultural sector.
In recent years, the overwhelming majority of investment applications assessed by the FIRB have passed the national interest test. In the relatively rare cases of rejection, it has consistently been for one of the above reasons. Examples include the ADM bid for GrainCorp <a href="https://jbh.ministers.treasury.gov.au/media-release/026-2013/">(</a>rejected in 2013 on competition policy grounds<a href="https://jbh.ministers.treasury.gov.au/media-release/026-2013/">)</a>, and the Singapore Stock Exchange’s attempted merger with the ASX (rejected in 2011 on financial regulatory grounds).
However, Scott Morrison’s preliminary decision to oppose Dakang Australia’s bid for S. Kidman and Co. fundamentally reinterprets these guidelines. Despite the fact the sale process was found to be open and commercially sound, it has been rejected.
The clear message is that sale process now needs to be re-run – with the assets disaggregated – to ensure less-competitive local companies can win at least some of the assets.
This is akin to moving the goalposts when the outcome is not what you desired. It is also inherently protectionist. It rewards Australian firms who will now get a second chance to pick up a part of the Kidman portfolio.
In essence, the Kidman decision is a de facto introduction of a local ownership policy for agricultural land. Outside of sensitive sectors (such as media), Australia has not maintained any formal local ownership rules since 1992. This makes the Kidman rejection was of the most significant foreign investment decisions made in several decades.
It is clear that the Treasurer sees Australian bidders as crucial to ensuring national interests are looked after, what is still not clear is definition of “foreign interest.”
<h2>How is foreign interest defined?</h2>
The Kidman decision comes as a senate inquiry examining the effectiveness of the Foreign Investment Review Framework finishes. The <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Foreign_Investment_Review/Report">final</a> and supplementary reports from the inquiry point to a lack of consistency and transparency of foreign investment decision making between the states and the commonwealth, particularly regarding sales of agricultural land to foreign interest.
At the moment the Foreign Acquisition and Takeovers Act 1975 deals with any foreign people or corporations that are seeking to acquire or to merge with a whole or a part of an Australian business. If a transaction exceeds a certain limit (different limits are applied to different industries) it’s reviewed by the Foreign Investment Review Board(FIRB).
However this Act doesn’t have a definition of foreign interest. This is crucial because since 1975, the picture of the world has dramatically changed.
According to ABS, until late 1980s, Australia’s investing partners were mostly persons and companies from developed market economies. Therefore, there could be little concern that Australia’s foreign counterparts were different to investing domestic entities.
These companies were either seeking profit or also seeking company control as direct investors and usually didn’t report to or take directives from any government on commercial decisions.
In late 1980s, new market economies emerged in place of both former communist countries, and reforming and rapidly growing third world nations. In some of those nations, such as most counties that replaced the former USSR, as well as in China, different forms of mixed private and public ownership in companies have been established with different roles and powers of governments in companies' decision making.
Despite of large scale privatisation, state and mixed ownership is still important and increasingly so in Russia. By 2014 China has become the 7th largest foreign investor in Australia, ahead of such countries as Germany, New Zealand, France. Meanwhile, ownership is rarely straight forward in China; and the countries' 500 global companies are mostly state-owned.
However, the 1975 Act does not require that the FIRB to look into the proportion of foreign government’s ownership in a company; involvement of a foreign government in company’s decision making (particularly, through government’s representation on the board of directors); government’s orders that limit company’s commercial independence; or compliance with legislation beyond that which normally regulates commercial activities.
This issue could be addressed by including foreign interest independence test into the FIRB process. Such a test needs to deal with the magnitude of sovereign ownership and sovereign involvement in foreign company’s decision making.
The idea of such a test was suggested on one of the submissions to the review, but did not find it’s way to the report.
Gennadi Kazakevitch is deputy head, Department of Economics, Monash University and can be contacted <a href="https://theconversation.com/profiles/gennadi-kazakevitch-90201" target="_blank">here</a>.
Jeffrey Wilson is fellow of the Asia Research Centre, Murdoch University and can be contacted <a href="https://theconversation.com/profiles/jeffrey-wilson-12717" target="_blank">here</a>.
Both are authors for The Conversation.
 
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jchancellor-FAypfDUnLy

Morrison’s ruling on Kidman & Co sale redefines the national interest test

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The Australian dairy farming industry is in a state of crisis. Cheap dairy products and fluctuations in both the domestic and global markets have taken a financial toll on farmers. Consumers have rallied to help struggling dairy producers.
But this is only half the problem. The true cost of dairy is also paid by dairy cows and the environment.
<h2>Welfare problems</h2>
Despite the idyllic image of outdoor farming, several industry practices negatively affect dairy cows. To meet production demands, dairy cows are subject to a continuous cycle of impregnation, induced calving and milking.
Tail-docking and horn removal are routinely performed without pain relief. Lameness is another major animal welfare problem, often the result of environmental pressures, such as tracks, herd size and handling. The average lifespan of a dairy cow is six to seven years, whereas generally cows can live for 20 to 25 years.
One of the most controversial issues is young “bobby” calves. A bobby calf is a newborn calf, less than 30 days old, who has been purposely separated from their mother. Immediately after separation, cow and calf call out and search for each other.
Most bobby calves are slaughtered within the first week of their life. Handling and transport pose added problems for young calves who have not developed herding behaviours, are vulnerable to stress, and are forced to go without their mother’s milk. Each year, 450,000 bobby calves are slaughtered.
Advocacy groups frequently uncover the routine abuse of bobby calves in Australian abattoirs and challenge the dairy industry to do something about it.
Yet aside from the wider ethical questions over the use and exploitation of animals, farmers are not legally doing anything wrong. This is because the treatment of animals operates in a legal context where animals are considered absolute property.
What’s more, farm animals are exempt from the provisions of anti-cruelty legislation. Codes of practice are practically useless, because they promote low welfare standards and are unenforceable.
<h2>The environmental impact</h2>
As well as systematic welfare problems, livestock farming is, both directly and indirectly, one of the most ecologically harmful human activities. The Australian livestock sector is worth A$17 billion and dairy cattle farming is a A$4.2 billion industry.
In Australia, livestock farming accounts for 10 percent to 16 percent of greenhouse gas emissions, with dairy farms contributing 19 percent of this, or 3 percent of total emissions. Methane emissions, from digestion and manure, and nitrous oxide from livestock are significant contributors. Globally, the livestock sector is responsible for more greenhouse gases than the world’s transport.
Livestock production accounts for 70 percent of all agricultural land, including the land used to grow crops to feed these animals. Animal agriculture is a key factor in land degradation, deforestation, water stress, pollution, and loss of biodiversity.
Livestock farming will also be affected by climate change, particularly changes in temperature and water. The quantity and quality of pasture and forage crops will also be affected. Diseases may increase due to fluctuating weather and climate.
<h2>Emissions can be reduced</h2>
Just as the energy sector is attempting to transition to low-carbon energy sources to tackle climate change, the agricultural sector needs to transition to an ethical and sustainable alternative.
From the current crisis, there are several opportunities for farmers to seize. Large transitions are possible in land use, production, output and profitability.
Places such as Gippsland in Victoria, which currently produces 19% of Australia’s dairy, have the opportunity for agricultural development based on apples and brassicas, such as broccoli, kale, cauliflower, cabbage, turnip and mustard. Some of these crops are already popular in the region. As a result of climate change and increasing temperatures, some areas will be more suitable than others.
While still in the stages of research, perennial grain crops – which store more carbon, maintain better soil and water quality, and manage nutrients better than annuals – have the potential to contribute to sustainable agriculture. New land uses could also include carbon plantings, biofuels and bioenergy crops. Investing into further research for alternatives to livestock farming is needed.
Some have argued that livestock emissions can be technically mitigated by modifying animal feed, better managing pastures, carbon sequestration and manure storage.
<h2>Welfare issues remain</h2>
But technical mitigation does not address the endemic animal welfare problems in the livestock industry.
Consumer demand is one of the most powerful strategies to combat animal welfare and environmental problems. Research shows that we must reduce food waste and losses in the supply chain and change our diets toward less resource-intensive diets, such as a plant-based diets. Doing so would cut emissions by two-thirds and save lives. It’s possible to eliminate animal suffering and reduce carbon emissions by reducing and replacing livestock production and consumption.
Alternatives to dairy milk include soy and almond milk. Soy milk is nutritionally comparable to dairy milk and has a significantly smaller environmental footprint.
Policy initiatives also need to address these issues. The Food and Agriculture Organization’s Livestock’s Long Shadow report recommends a policy approach that correctly prices natural resources to reflect the full environmental costs and to end damaging subsidies. In the interim, higher taxes on meat and other livestock products will be necessary to improve public health and combat climate change.
Denmark, for instance, is considering proposals raise the tax on meat, after its ethics council concluded that “climate change is an ethical problem”.
Governments everywhere need to have a transitional plan for livestock producers and workers – one that helps to cultivate the ethical and sustainable agricultural endeavours of the future.
Gonzalo N Villanueva is PhD Candidate, School of Historical and Philosophical Studies, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/gonzalo-n-villanueva-14280" target="_blank">here</a>.
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Dairy farmers are being ‘milked dry’, but let’s remember the real cost of milk

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The Doughboy Mountain cattle farm in the New England district has been sold by the Salter family to TA Field Estates, the Sydney-based company headed by Michael Field for $7.65 million.
TA Field also secured the neighbouring O’Connor family’s Mirrugalee paying $2.75 million.
The Doughboy farm was redundant to the Angus breeding business started by the late Salmat marketing company co-founder, Phil Salter in 2007 when Towal Creek Station on the Macleay River on the mid-north coast was bought. 
Consisting of 1,350 hectares between Armidale and Ebor, Doughboy Mountain runs pasture fed quality black Angus with carefully chosen genetics.
With lush paddocks on the Wongwibinda road, Landmark Harcourts Boulton Walcha agent Bruce Rutherford says its an opportunity to purchase the highly regarded property at a time when analysts predict much higher returns in agriculture.
The farm was bought in 2010 at $6.9 million from the pioneering Wright family.
Auctioneer Damien Cooley knocked the farms down at Friday auction.
Doughboy Mountain equated to about $5658/ha ($2290/acre) and Mirrugalee $5092/ha ($2057/acre).
TA Field has other rural holdings in the nearby Walcha district.
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Doughboy Mountain sells to TA Field Estates

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The Sydney based Gunn Agri Partners, headed by Macquarie Group's former chief operating officer in Brazil, Alan Hoppe, has secured the Central Queensland cattle station, Esmeralda in central Queensland.
It was listed at around $40 million.
Gunn Agri, trading as Cunningham Cattle Company and backed by Luxembourg funds, purchased the 406,000 hectares North of Richmond with 30,000 head of cattle. 
The deal follows Gunn Agri's purchase of a 36,000 hectare cattle aggregation near Roma in the Maranoa region of Queensland last December for about $11 million.
Gunn Agri counts among its directors the chairman of live export company Austrexx, Rick Trivett.
Ruralco Property's Troy Trevor and Peter MacPherson negotiated the deal.
There is also speculation the Gunn Agri Cattle Fund has made another major rural property acquisition, buying Goodar Station, north of Goondiwindi in Queensland, for about $20 million.
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Esmeralda, Queensland farm sells

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David Murray, who headed the financial system inquiry, has spent $7.35 million on adjoining sheep and cattle farms in the Upper Hunter Valley.
His purchases included historic Dales homestead on 1110 hectares at Merriwa for $4.7 million, along with the adjoining 640 hectare Ersyldene property for $2.95 million.
Murray, the inaugural chairman of the Future Fund, and former Commonwealth Bank chief bought through Lyndcote Pty Ltd, which is the name of his longtime Hunters Hill trophy home.
<a href="https://www.maccalluminglis.com.au/properties.php?id=13787185" target="_blank">The bluestone 1930s Dales homestead </a>was originally part of <a href="/news/42228-brindley-park-returns-with-30-million-hopes" target="_blank">Brindley Park</a>.
The Dales sale ends 178 years of ownership by the pioneering Bettington family.
MacCallum Inglis agent Michael Burke negotiated the sale, Fairfax Media reported.
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David Murray buys bluestone Upper Hunter homestead farm from the Bettinghams

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Gina Rinehart's desire to secure Australia's largest landholder, cattle company S.Kidman &amp; Co with a Chinese investor, is being challenged.
The rival bid has been confirmed from wealthiest graziers including BRW Richlisters Tom and Pat Brinkworth and Sterling Buntine.
The Kidman's preferred bid, at $365 million, comes via Australian Outback Beef (AOB), a consortium two thirds controlled by mining magnate Gina Rinehart, and a Chinese business partner, Shanghai CRED.
Their bid does not include Anna Creek, a property in South Australia that raised national security concerns when Chinese interests tried to buy the Kidman properties last year.
BBHO has since emerged, comprising four of the nation's wealthiest outback cattle and transport families offering $385 million, for all the properties including Anna Creek.
The local bid would avoid scrutiny by Australia's Foreign Investment Review Board given BBHO's directors, Viv Oldfield, Tom Brinkworth, Sterling Buntine and Malcolm Harris, represent some of the most prominent names in the outback.
The bid has not yet been received, but once it is, AOB has the right to match the offer.
AOB and Kidman have an agreement that triggers a $3.8 million break fee if either party walks away.
A finalised sale is expected early next year. 
Alice Springs businessman Viv Oldfield is most well known as a race horse trainer.
The 58 year old runs cattle on pastoral land in the Northern Territory and South Australia, and has partnered with a fellow pastoralist to sell cattle to China.
East of Alice Spring, Mr Oldfield runs cattle across the jointly managed properties Andado Station, Horseshoe Bend and New Crown.
He owns an outback transport company, Tanami Transport, of which S Kidman and Co is client.
The South Australian pastoralist Tom Brinkworth owns more than 100 properties spread across more than 400,000 hectares 
Sterling Buntine owns Alroy Downs Station and Dalmore Downs, along with Lissadell, Bedford Downs and Lansdowne stations in the Kimberley in Western Australia.
Malcolm Harris and his family recently gained approval to apply for a freehold lease on WA's Gogo Station at Fitzroy Crossing.
The family owns Benmarra Station in the Northern Territory, and Rockhampton Downs, near Tennant Creek.
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S.Kidman battle between Gina Rinehart and Richlisters

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Wanaka, one of the largest freehold high country stations, has been listed for sale.
The 6639 hectare Lake McKay Station is one of the Southern Lakes' most prominent properties.
It comprises a diverse outlook of mountainous terrain, natural gorges, stream and premium pastureland, as well as views over Wanaka and Mount Aspiring.
The luxury homestead was designed by Dunedin architect Mason &amp; Wales and has four bedrooms, three bathrooms, a games room and a boot room.
There's also a three-bedroom manager's residence, two bedroom staff quarters, a modern woodshed, large implement shed and sheep and cattle yards.
<img src="/images/2016/10/27/NZ%20PIC.jpg" alt="" width="509" height="340">
It's being sold by prominent Auckland-based businessman Colin Harvey and his wife Mary.
They purchased the farm in 2008 and have overseen the installation of a $2 million irrigation system, as well as the addition of a 135 hectare parcel of land.
They have ran it as a successful sheep and cattle station.
“It’s been an amazing journey in Wanaka,” Colin says. They are moving to spend more time with family and focus on business interest in Auckland.
New Zealand Sotheby’s International Realty sales associate Matt Finnigan says the property’s proximity to the Wanaka township, together with its diverse farming and recreational attributes, make for an attractive opportunity. 
“Lake McKay Station is situated in a dress-circle position overlooking both Lake Wanaka and Lake Hawea,” he says.
“The current owners have invested heavily in developing its infrastructure and irrigation, therefore the property has a solid farming backbone.
"It’s also completely accessible by vehicle, which is rare in a high country farm of this scale, and the views from all corners are extraordinary.”
 
 
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j.ballantyne1990-6AQqhLzZaK

Wanaka's Lake McKay Station in New Zealand listed

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A dairy farm in Drouin has sold for $2.1 million.
Comprising 91 hectares, the property is divided into 41 two hectare paddocks, with a central laneway and water to all from a spring fed dam.
It currently milks up to 180 cows and features a hay shed and machinery shed.
The main homestead is a <a href="https://www.realestate.com.au/sold/property-lifestyle-vic-drouin+south-7651047" target="_blank">fully renovated three bedroom home</a> with a brand new kitchen and ensuite.
It was sold by Harcourts agent John Rowe after having initial $2.3 million hopes when first listed in 2014.
 
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Drouin dairy farm sells for $2.1 million

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ASIC has obtained orders from the Supreme Court of Queensland appointing provisional liquidators to three companies due to concerns about a herd of approximately 261 head of cattle abandoned by Nangus Holdings Pty Ltd (previously Nant Angus Holdings Pty Ltd) management.
Nant Angus offered an investment in cattle to retail investors.
As part of the investment arrangement, Nant Angus was to lease the herds back from the investor for a period of five years from the date of purchase and then buy them back from the investor at an agreed price.
Investors were told that during the lease period they would be paid an annual interest rate of 9.95 per cent on their investment capital.
Investors were introduced to this investment through full page advertisements taken out in the Australian Financial Review newspaper by Nant Angus.
ASIC has obtained orders from the Supreme Court of Queensland appointing Mr Richard Hughes and Mr David Orr of Deloitte as provisional liquidators to three companies:
<ol>
<li>Nangus Holdings Group Pty Ltd</li>
<li>Nangus Holdings Pty Ltd</li>
<li>Nangus Grazing Company Pty Ltd</li>
</ol>
ASIC applied for and obtained these orders as part of an ongoing investigation into the Nangus Group of companies.
The orders were sought by ASIC due to concerns about the solvency and lack of management of the companies.
Keith Batt and Margaret Letizia, the individuals responsible for the creation and management of the companies, are now both personally bankrupt, disqualifying them from managing a corporation.
The orders require the provisional liquidators to provide a detailed report to the Court regarding the financial position and management of each company so the Court can consider whether to make final orders to wind the companies up.
The couple's Hamilton house has recently been <a href="https://www.urban.com.au/expert-insights/buying/82674-former-nant-owner-s-riverside-hamilton-home-set-for-mortgagee-auction" target="_blank">listed for sale by the receivers.</a>
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ASIC express concern over fate of Nant Angus cattle 

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Haranel, a fully operating cattle farm on Mount Mee on Queensland's Sunshine Coast hinterland, has been listed for sale.
It spans 67 hectares of lush pastures able to accomodate more than 80 breeders plus calves year-round.
Mount Mee is 1600 metres above sea level, with its climate of cool clean air and high rainfall suitable for cattle farming.
The locality was almost all dairy country decades ago, but now only a few remain as the cattle industry has taken over.
Ray White Rural agents Barry Quinn and Jez McNamara suggest Haranel is ideal for either cattle grazing or fattening.
Currently the property runs the Droughtmaster breed, a breed conceived in response to the need in the Australian Tropics for tick resistance.
The breed use the environment and the pastures in the most efficient manner to give higher weight gains and fertility.
Its not a well know breed as Droughtmasters make up just five percent of registered cattle across the country.
Late last year Haranel sold its six month old Droughtmaster calves for $725 at Woodford sales.
There's steel cattle yards and a spring fed permanent creek that runs through the property which takes its name from Hebrew for Mountain of God.
A six bay shed incorporates a two storey, two bedroom, fully self-contained mangers quarters.
Quinn and McNamara have set a July 6 auction date.
The country property comes with a 2013 built homestead on a level plateau at the top of the estate, capturing views across the surrounding mountains, farmland, creeks and valleys.
Quinn says it's arguably the best home in Mount Mee. 
The single level Queenslander with a wrap around verandah has two separate bedroom wings. There are six bedrooms, each with their own ensuite.
The large open plan living area with striking wood burning fireplace opens to terrace which features a swimming pool and spa.
Haranel last traded for $630,000 in 2012 before the house was built.
This article was first published in the Weekend Australian. 
 
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