FOREIGN investment will help boost the development of Australian agriculture during the Asian century, a parliamentary hearing has heard.
Treasury Markets Group executive director Jim Murphy said the department continued to welcome agricultural sector investment.
"I know there is some anxieties out there, but in terms of foreign investment in the agricultural sector it is a positive thing," Mr Murphy told a parliament hearing in Canberra on Thursday.
Analysts say that as the middle class in Asia expands, demand for a more Western-style diet will boost the local agricultural sector.
"They are looking at that as one of the key aspects for when the Asian Century paper is released, that there are further enhancements for the agricultural sector," Mr Murphy said.
Concerns about foreign investment were raised after Treasurer Wayne Swan approved the sale of Australia's largest cotton farm, Cubbie Station, to a Chinese-dominated consortium.
Mr Murphy said the Foreign Investment Review Board (FIRB) did not decide whether a commercial sale could occur, but only checked to make sure it was not against the national interest.
"It just says that ... the proposal you have put forward .... is not in contrary to the national interest," Mr Murphy said.
He said the voluntary administrators of Cubbie Station, McGrathNicol, were responsible for the deal.
Under the terms, textile manufacturer RuYi - owned by investors based in China and Japan - will take an 80 per cent stake in the station. That will be sold down to 51 per cent within three years.
Treasury foreign investment and trade policy division general manager Samantha Reinhardt said the consortium had to report to FIRB annually on how it was meeting its obligations.
Ms Reinhardt said investigations showed no Australian firms were prevented from bidding for Cubbie.
"We were reassured that there wasn't a viable Australian bidder that was being blocked from pursuing their bid," she said.
NSW Nationals senator John Williams later issued a statement, saying there was a disparity in the FIRB's treatment of foreign ownership in Australia.
He said Mr Murphy had admitted before the committee that there were tighter FIRB rules on residential real estate than for farmland - so as not to inflate the housing market.
Senator Williams said foreigners are prohibited from acquiring established dwellings for investment purposes, or as homes, except in certain circumstances.
There are tight restrictions on other residential purchases, some of which need approval, he said.
"However, it is open slather on farming land.
"Foreign investors can buy up and force the prices up which is good for equity, but (they) can price those wanting to expand their holdings out of the market."