Chinese investment in farms might not be scary after all

CHINESE investors bought less than 1% of Australia's farm land in the past six years, with only 10 deals worth a total $1.05 billion so far secured.

That was the verdict from an extensive study on Chinese investment in Australia, led by economic analysts at KPMG and the University of Sydney.

The results of the study were released on Wednesday, and showed while China was one of the biggest investors in Australian mines, the trend has not yet caught on in agriculture.

And that was despite the controversial sale of Cubbie Station to a China-Japan-Australian joint venture earlier this year.

Professor Hans Hendrischke of the university's Business School said the research had found only 10 completed deals by Chinese buyer for Australian farm land since 2006.

He said the total Chinese investment in agriculture (business and land) came in at just 3% of total direct investment by Chinese interests last year, including the Cubbie Station takeover.

"Overall, between 2006 and 2012 only 2% of Chinese investment to Australia has gone into agriculture," he said.

The study confirmed China remained in ninth position for foreign investment in Australian agriculture, but also found it was likely to rise.

It revealed Chinese investors were likely to continue investing in Australian land and agribusinesses as a way to supply current demand, rather than secure long-term food security for China.

The study found such investments were largely driven by Australia's reputation for safe food production, diversity of ownership, and an "exploratory approach" to overseas investment in the sector.