Crafar Farms sale to Chinese buyers approved
Government ministers have signed-off the controversial deal to allow Chinese company Shanghai Pengxin to buy the Crafar Farms.
Today's decision has sparked a fresh round of heated comments about the sale.
Save the Farms spokesman Tony Bouchier is disappointed but not surprised, while BusinessNZ chief executive Phil O'Reilly says the decision shows the world New Zealand is "open for business".
Jonathan Watts, an executive member of the NZ-China Trade Association, says the sale will result in added investment in the farms which has been lacking for some time.
Spokesman for Shanghai Pengxin, Cedric Allan, says that after a very long process, it is nice to finally have it as a done deal.
He says they are talking to the receiver and arranging to settle a transaction.
"Then we will move on to the farms, work out how we're going to work with the people who are there already, and start supplying milk to Fonterra," he told
Mr Allan says they're committed to spend about $1 million upgrading each farm over the next three years.
"At the same time, we'll be looking for processing arrangements to manufacture high-value dairy products for us to sell in China.
"We've got a brand name, which is NaturePure, and we hope to be on supermarket shelves in China fairly promptly."
Mr Allan says they will spend at least $100m on marketing the company's products.
He hopes this will open the door for other New Zealand dairy companies to do the same.
"I know Fonterra also wants to develop high-value branded products to sell in China, and I think much more co-operation and competition between New Zealand and China in that market will benefit everybody."
The prime minister believes the best bidder won.
"There were 27 criteria they needed to meet. The bid from Shanghai Pengxin met all those tests."
He says criticisms of the sale are unfounded.
"If you put in perspective the amount of farm land that's being sold, it's fairly small in the overall nature of farm land in New Zealand.
"This is ultimately going to create more jobs and more opportunities for New Zealanders.
"Fonterra themselves have announced they're investing $100 million in farmland in China, so investment goes both ways and it's important for an open economy like New Zealand."
Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman said this morning they approved a new Overseas Investment Office recommendation, after they were ordered by the High Court to review an earlier decision.
Mr Williamson says the government sought to apply the law in accordance with the Overseas Investment Act and the "guidance" of the High Court.
“We are satisfied that on even the most conservative approach this application meets the criteria set out in the Act and is consistent with the High Court’s judgment.”
Dr Coleman said the consent comes with 27 "stringent" conditions which require Milk New Zealand to invest $16 million into the farms and protect and enhance heritage sites.
“The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial.”
The decision comes on the heels of a visit to New Zealand by China's fourth-ranked leader Jia Qinglin, who was in the country on Tuesday.
The government said the Crafar Farms sale was not discussed during the diplomatic visit.
Fay group: bad deal
Spokesman for the Sir Michael Fay-led consortium Crafar Farms Purchase Group, Alan McDonald, says it's a bad deal.
"For the central North Island economy, that's $20 million of Fonterra payouts every year going out the door.
"The iwi guys are really quite angry, because they see a lost opportunity to get back land they've had claims on since the 1800s."
Mr McDonald says the fight is not yet over for the group - it still has a live appeal with the Court of Appeal, which argues Shanghai Pengxin doesn't have the business acumen and experience relevant to the investment.
"They aren't dairy farmers, that's why they had Landcorp negotiate a deal for them."
He says the appeal was lodged six weeks ago, and they're still waiting for a date for it to be heard.
Executive member of the NZ-China Trade Association Jonathan Watts says the sale will result in added investment in the farms which has been lacking for some time.
"I'm sure there's going to be jobs for New Zealanders in this," he says.
The sale could lead to further deals from other foreign investors.
NZ dependent on foreign investment - BusinessNZ
BusinessNZ chief executive Phil O'Reilly said New Zealand's economic growth has always been dependent on foreign investment, because of the country's size and distance from markets and lack of scale.
The debate about foreign investment demonstrates a fundamental misunderstanding about the basis of New Zealand's success, he says.
"They seem to think we can do it all ourselves and we can't.
"We simply don't have the capital in New Zealand, and never will by the way, in order to do all of these things, so we do need these types of partnerships."
If the decision stands, it clarifies the rules governing foreign investment, he says.
He hopes it will end legal action in the case and the country could have mature debate about some of the challenges of direct foreign investment.
"Every time there is legal action that just creates yet a further difficulty with confidence in our international investment regime, not just from the Chinese but from every other foreign country as well."
Disappointed - Save the Farms
Save the Farms spokesman Tony Bouchier says he is disappointed, but not surprised, by the government's decision to approve the bid.
"This government has a track record of not listening to its constituents. This decision was made in the face of overwhelming opposition."
He says this opens the door for “an avalanche of sales” to overseas investors and sovereign funds with "deep pockets", which will make horticultural land unaffordable to young New Zealanders.
At a general media briefing earlier in the day, a senior political counsellor at the Chinese Embassy in Wellington, Cheng Lei, declined to comment directly on the potential for the Crafar purchase to go through, but stressed New Zealand companies were welcome to invest in China.
“If you are ambitious enough, you can conquer the Chinese market,” he said, citing Fonterra’s plans to create as many as 33 dairy farms in China and the “amazing speed” of its ambitions.
“We encourage New Zealand businesses to go to China, and we also encourage good, qualified New Zealand businesses to see opportunities in your country.”
Asked whether he thought New Zealanders were xenophobic about Chinese investment in this country, Mr Lei said “no” and that New Zealanders were “open-minded” and “friendly”, and that the country was of interest to many foreign investors, including from Australia and the US.
The newly inked target of an increase in two-way trade to $20 billion by 2015 could potentially be reached early because of the growth in the trade relationship between the two countries, he said.
Foreign investment needed - Fed Farmers
Earlier, Federated Farmers President Bruce Wills told NBR ONLINE 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.
Today's announcement mirrors one in January, when Messrs Williamson and Coleman accepted the original OIO recommendation they grant consent to Milk New Zealand Holding, a Shanghai Pengxin subsidiary, to acquire the 16 farms and have them managed by NZ government-owned Landcorp.
However, lawyers for a rival, the Sir Michael Fay-led consortium, successfully pursued an injunction to stop the sale and the high court ordered the government to reconsider its decision, over whether the purchase would bring economic benefit to the country.