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Australian cane harvest to hit seven-year high

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Australian cane producers painted a less negative picture than many domestic farmers over foreign ag investment as they forecast that an industry renaissance would drive output to a seven-year high.

Canegrowers forecast that Australia, the world's third-ranked sugar exporter, would deliver a cane crop "in excess of" 32m tonnes this year, for the first time since 2007.

The improvement from 30.5m tonnes in 2013 reflects in part expectations of rains for the country's cane growing region, on the east coast in Queensland and northern New South Wales, after a December which brought the driest year-end in a decade.

"Hopes were high in the industry that January would herald in some good soaking downpours to spur along the coming crop and deliver good returns for the 2014 season," the producers' group said.

Trend reversal

However, the improvement also reflects a reversal of a trend of declining cane area from highs a decade ago of 448,000 hectares, on a harvested basis, according to data from the Abares commodities bureau.

Canegrowers, forecasting a rise of some 2,000-3,000 hectares in cane area for this year, said that "large tracts of land being returned to cane, including area from the now defunct managed investment schemes and new area.

"The steady decline in Australia's cane area in the past decade has steadied and is now pointing upwards for the first time in years."

'Worth investing in'

And this revival was coming amid a spree of foreign investment in the country's mills, with the likes of Singapore's Wilmar International, China's Cofco and Thai-based Mitr Pohl buying Australian sugar businesses over the last three years.

"It's not just Australia's sugar, but also our assets that the world is hungry for," Canegrowers said.

"Large international corporations have spent billions to purchase the industry's milling assets and millions upgrading those mills and restoring productive capacity.

"The intense interest in Australia's sugar milling assets by large international players is telegraphing the message broadly that there is a real future in Australia's sugarcane industry – and one worth investing in."

Political concerns

This apparently benign view of investment in the sugar sector contrasts with broader concerns over foreign buyers in the grains sector, evident in the government's refusal in November to permit the $3.1bn takeover of Australian crop handler GrainCorp by US-based Archer Daniels Midland.

The National Party, a junior member of the ruling coalition, came to last year's elections with a pledge to cut to Aus$15m the threshold at which foreign purchases of Australian land require Foreign Investment Review Board approval, and Aus$53m for agribusinesses.

Last month, these limits were enshrined in a free trade agreement with South Korea.

This means, for example, that any Korean company seeking to purchase Australian farmland worth more than Aus$15m requires government approval.

Australian farmland has attracted a range of foreign investors, including European funds, Qatar's Hassad Foods, which has accumulated 255,000 hectares of land for grain and sheep, and the investment by China's Shandong RuYi Scientific & Technological Group in the huge Cubbie Station cotton growing operation.


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