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Feds uneasy about Lochinver sale to Chinese

Federated Farmers says it is concerned the sale of Lochinver Station to Shanghai Pengxin Group may not provide sufficient benefit to New Zealand.

“Federated Farmers is, frankly, uneasy about the potential sale of Lochinver Station to Shanghai Pengxin,” according to Dr William Rolleston, Federated Farmers president.

“New Zealand absolutely needs foreign investment but it has to be of benefit to the local and national economy. 

Dr Rolleston says that, given the location of these farms to Shanghai Pengxin’s other landholdings, it will increase speculation that vertical integration by way of processing could be on the cards. 

“In December 2010, the government tightened the rules around foreign ownership by way of an economic interests factor in the Overseas Investment Office’s consideration. This allows ministers to consider whether New Zealand’s economic interests are adequately safeguarded and promoted in the case of land aggregation or vertical integration.

“Considering Lochinver Station on its own is three times the land aggregation trigger level, let alone when added to the former CraFarms, this will be a test of the OIO’s rules.

“Last year, Federated Farmers wrote to ministers requesting research into the extent of overseas investment in farmland. We understand ministers were concerned at the potential cost but the economic price of getting foreign investment rules wrong outweighs this. 

“The reality is that no one knows how much of our farmland or housing is foreign owned.”

The 13,800ha Lochinver Station near Taupo was placed for tender by Stevenson Group, which has owned it for more than half a century. 

Stevenson Group says it will use the funds to invest in a quarry development at Drury.

Lochinver is one of the largest rural runs in the country, with a rateable value of $70.6 million. 

Bayleys was the marketer and expected the sale price to exceed the biggest farm transactions undertaken in the past five years – including St James Station in Canterbury for $45 million; a rural Dipton property in Southland that sold for $33 million; and Mt Pember Station in North Canterbury, which sold for close to $30 million. 

Lochinver is on the Rangitaiki Plains, 32km from Taupo and 92km from Napier. It is a sheep and beef breeding and finishing and dairy support station with three airstrips, a lake, a recreational hunting block, 22 houses, which accommodate the families of 20 permanent staff, a staff recreation centre, a school, 91km of well-formed pumice roads, six cattle yards, three woolsheds and other farm buildings. 

Last week Pure 100 Farm, a local subsidiary of Shanghai Pengxin Group, signed the sale and purchase agreement for Lochinver Station for $74 million.

The Central Plateau farm acquisition is now before the Overseas Investment Office and will then go through the Chinese regulatory approval process before settlement.

The group currently owns 16 farms in the North Island. In March this year, it also secured a 74% of 13 farms in the South Island.

Shanghai Pengxin says its philosophy is to work co-operatively through its local subsidiaries within the New Zealand farming industry and support new investment and innovative opportunities, as well as productivity enhancement, sustainable farming practices, and building supply chain capability.

What do you think? Should OIO approve the sale of Lochinver Station to Shanghai Pengxin? Click here to vote in our subscriber-only business pulse poll.

Comments and questions

"Shanghai Pengxin says its philosophy is to work cooperatively through its local subsidiaries within the New Zealand farming industry and support new investment and innovative opportunities." So what's the beef? If they do that in principle and in practice, why give these foreigners such a hard time? Their USD is a good as anyone else's, it's not like they can tow the land back to their own country. If we can keep an eye on their cash and their activities on the land here, we should all be for it.

That's it annonymouse you tell 'em. Can some one please tell me when the "Feds" lost their bottle?

Are they saying that their members must be aware of Winstons feelings when they decide to sell??

What is going on?

This is definitely not the "Feds" I was once a member of and as a provincial president in!!

Might be time we all checked the difference between surfing and 'serfing'.

If the Feds are uneasy ( probably just playing politics) then they should have all put their hands in their pockets and bought the farm when there was an opportunity. It was not a secret deal --it was on the open market for sometime.
If it is so important 20-30 farmers could have raised the money to buy it and formed a farming company.

As one who has trodden city streets looking for capital to invest in productive farmland, I am amused to note that while city investors will not themselves invest in our national asset, they look to exclude foreign ownership. I believe that the separation of ownership of farmland from the business of operating a farm will become a more significant aspect of our rural landscape and this will include foreign ownership.
Offshore investors are content with the low yield associated with the ownership of farmland and local farmers will achieve a higher return by investing in the other classes of assets associated with the farming activity.
The benefit is that we will encourage productive farmers rather than those farming for capital gain, and after all, most of our mortgage money is sourced offshore. From a liquidity point of view it is more difficult for foreign investors to withdraw capital invested in farmland.
A good result would be the transfer of the actual stewardship of this piece of land from the enterprising Stevenson family to the safe hands of Landcorp.

Whether the feds comments are politically motivated or not, one has to take a long term view of selling land to people/organisations who do not live here.

Especially, if the central, regional and local governments are playing lip service to the pollution that intensive farming is creating on our waterways.

Water would be the next oil/gold, as short term profiteers pollute them far and wide.