Foreign funds vital: govt

CONTROVERSIAL foreign investment in Australian farming land is here to stay and is vitally important for the agriculture sector to exploit surging demand from Asia, the federal government says.

The government has launched a green paper for the National Food Plan, forecasting a 77 per cent rise in demand for food by 2050 and noting it presents a huge opportunity for Australia.

The paper predicts the world's middle class will increase to 4.9 billion by 2030, with 85 per cent of the growth in Asia.

Despite concern from some quarters over foreign investment in farming, the government says it welcomes foreign investment, saying it plays an important role in maximising food production.

''Any reduction in foreign investment in the agricultural sector would likely result in lower food production with potentially higher food prices, lower employment, lower incomes in the sector and lower government revenue,'' the paper says.

The paper outlines challenges that need to be resolved including finding balance between farming and coal seam gas mining, and mining in general.

''The government is confident that mining and farming can co-exist without affecting Australia's food production capacity but recognises land use planning is a significant policy issue that must be considered carefully.''

The paper says there needs to be a forum between suppliers and supermarkets to improve relationships with concerns over the supermarket giants' dominance and impact on prices and food processing in Australia.

With the cost of healthy food rising faster than the price of a less healthy diet, the report floated the prospect of greater pressure on the food industry to rein in advertising of unhealthy food.

It says the effectiveness of food industry measures will continue to be monitored to determine if companies can ''adequately limit unhealthy food advertising to children without the need for further government regulation''.