ABSTRACT
In their highly influential teaching and research text Global Restructuring: The Australian Experience Fagan and Webber set out a substantivist, institutionalist and multi-scalar account of the Australian space economy’s relatively rapid and radical globalisation after 1980. This paper extends Fagan and Webber’s global restructuring thesis to Australian farming and agriculture, connecting historical and more recent scholarship on agriculture–finance relations. We highlight two areas where finance has fundamentally reshaped the agricultural sector. First, we argue that financial restructuring has shifted the relationship between farmers and lenders. Second, we suggest that under the logics of finance, Australian land and water are emerging as ‘alternative’ financial asset classes. The paper demonstrates that Australian agriculture has become subject to a comprehensive process of finance-driven economic restructuring over recent decades. Regulatory changes since the 1980s have resulted in an agricultural sector where finance’s growing role is normalised as a part of the sector’s operation. Importantly, we stress the paramount role governments have played in redefining agri-finance relationships in Australia by promoting and providing the regulatory framework for processes of marketisation and assetisation, thereby making agriculture attractive to subsequent financial investments. Finance does not operate on its own but relies on the state’s crucial role in incentivising and setting the conditions for finance capital.
Acknowledgements
We thank the two anonymous referees of Australian Geographer for providing helpful comments.
Disclosure statement
No potential conflict of interest was reported by the authors.
ORCID
Neil Argent http://orcid.org/0000-0002-4005-5837
Nicolette Larder http://orcid.org/0000-0001-8119-4879
Notes
1 Larder and Sippel started working on the topic within the context of the Australian Research Council-funded project ‘The New Farm Owners: Finance Companies and the Restructuring of Australian and Global Agriculture’ (DP 110102299) led by David Burch and Geoffrey Lawrence, where Larder was a research assistant and Sippel was an affiliated researcher. Since then, collaborative work of all three authors has continued within the context of further research grants located at the Universities of Leipzig, New England and Queensland (see the Funding section for funding details).
2 Two main categories of investors are usually differentiated: institutional investors such as mutual funds and superannuation funds that invest on behalf of their customers; and retail investors, which are individuals who invest their personal money. Retail investors typically invest much smaller amounts than institutional investors although high-net-worth individuals may invest at levels closer to institutional investors than the average retail investor.
3 Managed funds, also known as pooled or collective investments, generally involve a large number of investors (the majority being retail investors) pooling their money to invest in a range of financial and retail assets that may include agricultural and forestry schemes, property trusts, international equity trusts or managed strata title schemes. The pooling of small of amounts of capital from many households creates sufficient scale to allow retail investors access to investment products they would otherwise not have sufficient capital to engage in. Managed funds in Australia were regulated in 1998 under the Corporations Act (2001), which designated managed funds ‘managed investment schemes’ (MIS).
4 Australia-based MIS that invest in agriculture, also known as agribusiness MIS, are not the same as farmland-focused real estate investment trusts (REITs) as discussed by Fairbairn (Citation2014). Beyond the different legal and taxation frameworks that govern them, the main difference is how returns are generated for investors: with REITs, investors gain returns from any increase in value in the underlying real estate asset and regular rental income generated from the assets, while in agribusiness MIS returns for investors are generated through production of forestry or agricultural products rather than land rent. From the perspective of investors this is an important difference because REITs are likely to generate returns at once compared to MIS where investors can be waiting for years for a return on their investment.
5 ‘Finance capital’ is not a category that appears in official Australian farm(land) ownership statistics as provided by the Australian Bureau of Statistics; moreover, companies and government institutions often withhold information.
6 It should be noted, however, that various (political) actors have recently called for the increasing engagement of Australian superannuation capital in Australian agriculture (Sippel Citationforthcoming).
7 The Murray-Darling Basin is responsible for 95 per cent of Australia’s water market activity (MDBA Citation2015).