Crafar-China controversy could spook foreign investors – Fed Farmers
At a media briefing yesterday, a Chinese embassy official reportedly issued a not-so-veiled threat over the Crafar farm deal.
The government is waiting on a new Overseas Investment Office recommendation on the $210 million Shanghai Pengxin bid for the 16 Crafar Farms, following a High Court-ordered reassessment of the original OIO approval.
Political counsellor Cheng Lei implied future Chinese investment in New Zealand hinged on the outcome of the OIO review.
Mr Cheng said US, EU and other foreign investors would also be watching with concern.
This morning, Federated Farmers president Bruce Wills did not want to comment on the specifics of the Chinese embassy counsellor’s comments.
But he did tell NBR “There is a danger the controversy will scare off all foreign investors. They might look at it and say ‘This is just too hard. There are just too many hoops to jump through.”
It was particularly debilitating that the Crafar controversy had dragged on for two years, Mr Wills said.
“Investors need certainty and clarity. Especially if OIO approval is required, they need some kind of steer on whether they’re likely to succeed,” Mr Wills said.
“They might just say, ‘This is too hard’ and take their money to South America or elsewhere.”
Foes of the Crafar sale – including the Sir Michael Fay-led consortium that has bid $170 million – would say that is no bad thing.
So where does Fed Farmers stand?
It straddles the fence.
On the one side, the organisation would have liked to have liked to have seen the 16 farms sold separately – an option that would have made the sale process more accessible to local buyers.
“But we’re also sensitive to the fact New Zealand needs foreign investment,” Mr Wills said.
“Sadly, we’re a nation of spenders, not savers.”
Urban and rural areas are both in debt – most of it owed to foreign banks.
Farm debt alone is $47 billion, Mr Wills said.
The Crafar farms are currently in the hands of an Australian bank (Westpac). A sale to a overseas party would mean foreign debt was being replaced by foreign equity.
“We need to be very concerned we're frightening off foreign investors,” Mr Wills said.
So does a government that desperately wants to realise export gains promised by New Zealand's hard-won free trade agreement with China, but is wary of hostile public sentiment.