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China to be awarded huge swath of WA farmland | Updated: 12:49:34 PM, Thursday November 15, 2012 Ord River, Kununurra
Kununurra, Ord River

The West Australian and federal governments are bracing for a renewed backlash against foreign ownership of Australian farmland as they prepare to announce that Chinese property development conglomerate Shanghai Zhongfu has been granted the sole right to develop 15,200 hectares of high-value irrigated agricultural land, according to The Australian.

The little-known private Chinese company has taken out a 50-year lease on the condition that the land, within the Ord River second stage expansion near Kununarra, be cleared, developed and farmed, and a modern export sugar mill be built.

The Shanghai Zhongfu Group principal stakeholders include the Chinese communist party, an affiliated union and a financial services entity. Established in 1992 its corporate website states that it is now a fully integrated real estate company. With beginnings in real estate management it soon branched into apartment, hotel and commercial building development. Other activities include car park management, interior design, antiques sales and import and exports. Its website does not indicate any agricultural experience and it’s most recent signature project is a metro development offering a four star hotel, apartment complexes and integrated retail and commercial zones. Former Prime Minister Bob Hawke has also been employed as lobbyist.

The West Australian government will announce the scheme next Tuesday, according to The Australian, in a deal that will double the size of the East Kimberley’s 30-year old food and farming scheme.

The state and federal governments are expecting backlash over the $510 million worth of taxpayer funds used to build roads, irrigation, port and local community infrastructure to support the deal. But the state will argue that between the 50-year lease and the fact that the company will not own the irrigation channels make it a good deal for taxpayers.

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The Barnett government will argue that the Shanghai Zhongfu deal is different from the controversial purchase of Cubbie Station by Shandong Ruyi for $300 million, which sparked a heated debate about foreign ownership of the agriculture sector. The state will say the difference is that in the East Kimberley case, the land is leased and was not already developed, The Australian reported.

The Ord River Stage 2 development was officially placed on the market in late 2011. It included 7,400 hectares of developed land, comprising of 7 farm blocks in the Goomig farm area, where the WA Government has spent $220 million in upgrading infrastructure. The undeveloped parcel of land includes 7,800 hectares, made up of two parcels known as Knox Plains and the Ord West Bank. Reportedly the Shanghai Zhongfu Group has picked up the entire Stage 2 development for a peppercorn rent, although only last year two farms in Stage 1 sold for $1.75 million (165 hectares) and $1.23 million (92 hectares), despite having some long term lease obligations.

Wikipedia: The Ord River Irrigation Area (ORIA), which was originally known as the Ord River Irrigation Scheme (ORIS) or Ord River Project, when it was approved by the Commonwealth Government, late in 1959 and began in 1960 with the establishment of the town of Kununurra, which was gazetted a town on 10 February 1961. Australia’s largest artificial lake by volume, Lake Argyle was completed in 1971.

The Ord River dams provide water for irrigation to over 117 km² of farmland and there are plans to extend the scheme to allow irrigation of 440 km² in the near future.The main Ord River dam also generates power for the local community of Kununurra. By 2009 more than 60 different crops were grown in the Ord catchment area. One third of the area is used for sugar cane cultivation.

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Image: Creative Commons, Author: isthatdaves

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