Australia risks losing an opportunity to become a farmyard for Asia, as growing unease over foreigners buying rural land threatens to provoke protectionist policies that may deter much needed investment in agriculture.
With its vast landmass, abundant natural resources and stable government, Australia has relied on foreign farm investments for more than 100 years, with interest set to grow as the world looks to dramatically boost food production to feed Asia's booming middle class over the next 40 years.
"I think we are going to see a continued interest. The soft commodities boom around the world and the demand for food will continue to drive that interest," said Jock Laurie, head of Australia's top farming lobby, the National Farmers' Federation.
The latest wave of interest in Australian agriculture has seen a number of high-profile deals involving Chinese investors, including the purchase of the country's biggest cotton farm, as well as foreign takeovers in its deregulated wheat industry. U.S firm Archer Daniels Midland is bidding $2.8 billion for Australia's dominant grain handling company, GrainCorp.
But the growing interest has ignited a political debate and raised the risk of tighter foreign investment rules in a country generally seen as more open to investment than farming rivals Canada and New Zealand.
"We know foreign investment is important to Australia. But we need to make sure we're not selling the cow along with the milk," said independent Senator Nick Xenophon.
The issue is a sensitive one in mostly conservative rural communities, particularly for a government struggling in opinion polls and facing elections in late 2013.
A poll by the Lowy Institute think tank this year found four out of five Australians opposed the government allowing foreign companies to buy Australian farmland. Some 63 percent were "strongly against" such sales.
Most sales of Australian farms to foreigners go unregulated and unrecorded. Only the largest farm deals - purchases of at least 15 per cent of properties worth more than A$244 million ($252 million), or A$1 billion for U.S. investors - are examined by the Foreign Investment Review Board (FIRB).
FIRB's "national interest" test has also been criticised as too vague and lacking in transparency. The rules mean foreign investment is assumed to be in the national interest unless the FIRB finds otherwise.
Foreign investment rejections are rare. In the 2010-11 financial year, FIRB considered 10,293 investment deals and rejected only 43, with 42 of those suburban real estate purchases. It ap p roved 5,687 investments with conditions.
In Canada, foreign investors need to prove there is a "net benefit" to Canada for any investment over $332 million, and the industry minister has broad leeway to interpret the rules.
Ottawa has scuppered at least two high profile resource deals - BHP Billiton's $40 billion bid for Potash Corp and most recently, a $5.2 billion bid for Progress Energy by Malaysia's Petronas.
New Zealand reviews all foreign acquisitions of farmland above 5 hectares, meaning deals worth hundreds of thousands of dollars rather than tens of millions can be examined.
A lot is at stake for Australia.
The U.N. Food and Agriculture Organisation has said global food production needs to rise 70 percent by 2050. Australia, which exports around A$30 billion worth of food yearly, wants to cash in on that growth, particularly from China and India.
Yet a report compiled for ANZ Banking Group has found Australia needs an extra A$1 trillion in capital over the next four decades to improve agricultural supply chains and production and fund the transfer of farms to a new generation.
Though a modern farm economy, Australia struggles with under-performing properties, inefficient supply structures and high levels of farm debt and needs to invest in new technology, markets and products, ANZ said in its "Greener Pastures" report.
Australia is fighting not only its developed-world peers, but faces fierce competition from emerging market agricultural powerhouses Brazil, Malaysia and Indonesia, the report notes.
The conservative opposition, which is on track to win power at the next elections, wants the farm threshold for foreign investment scrutiny lowered to A$15 million, and wants to make sure the FIRB has at least one member with farm expertise.
A Senate inquiry, dominated by opposition lawmakers and due to report in November, is likely to call for lower thresholds so more farm deals face FIRB scrutiny.
The government, reliant on Greens and independents to hold power, has so far been reluctant to make significant changes, conscious of the need to attract foreign investors to help build its farming sector.
Instead, Prime Minister Julia Gillard has agreed to set up a register of foreign ownership of farm lands in a move designed to appease public unease without unsettling investment flows.
But the political noise surrounding foreign farm investments continues, with the leader of the rural-based National Party, Warren Truss, criticising the ADM bid for GrainCorp.
"We are rapidly descending into a state where farmers will toil in their paddocks while post-farm gate profits from Australia's A$9 billion a year grain crops will be counted in multi-national boardrooms," said Truss, who would become deputy prime minister under a conservative government.
Ian Smith, of corporate advisory firm Bespoke Approach which has helped Chinese investors tip-toe through the FIRB processes, said he did not believe the new register signalled a tightening of foreign investment rules.
"Given the recent political attention it is not a surprise that steps have been taken. It is not so much a tightening of the regime, but more a sign by government that it is responsive to public concerns without undermining potential investment," Smith said.
Foreign investors needed to be aware of the domestic debate, and make sure they highlight benefits to local communities and jobs from any deals, he said.
"The noise of the outspoken and at times xenophobic politicians is very damaging for Australia's reputation as place to invest," Smith added.