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Swedish investors buy Hart's dairy farms

Swedish investors have government approval to buy eight Waikato dairy farms owned by NBR Rich Lister Graeme Hart.

The farms were part of 29 former Carter Holt Harvey dairy farms near Tokoroa – supporting almost 20,000 dairy cows over 30,000ha, on land converted from forest – put up for sale in 2010.

They were marketed for $225 million, with the cheapest at $5.1 million, suggesting the Swedish deal is likely to be worth tens of millions of dollars.

Ex-All Black captain Graham Mourie will run the farms for the Swedes.

OIO approval

In a just-released approval by the Overseas Investment Office, Southern Pastures Limited Partnership will buy 3205ha in the Waikato owned by two companies controlled by Mr Hart's Rank Group.

Company spokesman, PR man Cedric Allan, would not reveal the sale price or name the Swedish investment institution which held 99% of the limited partnership.

The New Zealand company involved is Hamilton-based Southern Pastures Founders, he says, and Mr Mourie will run the farms through sister company Southern Pastures Management.

"The eight of them are all in the same geographical area so if you're running a bunch of farms on behalf of investors it's very convenient if the farms are close together, because you can use your labour and equipment much more efficiently.

"This is a model that enables an overseas or New Zealand institution for that matter, to invest in dairy farms but not have to worry about stocking rates and droughts and things like that – there's skilled professionals who are committed and contracted to running them and implementing a business plan."

Mr Allan says the intention is to increase the farms' grassed and farmed areas and increase stocking rates, improve pasture quality and upgrade farm infrastructure.

The milk from the farms goes to dairy giant Fonterra now and will continue to do so, he says.

Production plans

The OIO approval, dated December 4, says Southern Pastures is buying the land to run as commercial dairy farms.

"The applicant intends to increase sustainable production and develop the farming operations through additional capital expenditure, sound farming practices and good management."

The general partner of the limited partnership is Auckland-based Southern Pastures Management, a subsidiary of Southern Pastures (NZ) controlled by Foundation Capital.

Foundation Capital's directors are Prem Maan, an economist and former banker, and Auckland property developer and owner Phillip Wight.

Mr Mourie is Southern Pastures Management's executive director and chairman of Southern Pastures (NZ).

In 2010, Southern Pastures was reportedly seeking $500 million from local and offshore investors for farming investment, mainly in New Zealand.

Foreign ownership of New Zealand farms has been a sensitive issue, following the controversial purchase of the Crafar farms by Chinese company Shanghai Pengxin and plans by two Chinese companies to build dairy factories in this country.

dwilliams@nbr.co.nz

More by David Williams

Comments and questions
27

Winston, are you unhappy with this one, or is it only the Chinese buying farms that gets you going?

I can help you there. No he won't like it. Neither will that Kermit-coloured mob.

Why don't the Maori tribes object the sales and offer to buy the farms? Where is Michael Fay?

Have you not noticed yet that the iwis only take, they don't buy?
Fay only gets involved if there is a massive take involved in the bottom line. He would deem these to be fully priced, with no desperation involved.

Does that mean Mourie resigns from the Hurricane board and applies for the Chiefs board, or was he thrown off by Morgan when Wellnix bought in?

Dont you get it Bum Fox? It's not about the buyer. It's about selling off our land to foreign owners who are not a NZ citizens or have a NZ residency. Get it?

Is that you Winston?

Wait for Winston's response! If nothing, you're looking in a mirror.

Are we not allowed to buy farm land in Sweden?

Will the Swede investment not employ existing farm workers? Pay taxes? Supply to Fonterra?

Heck, they might even bring in money from overseas to improve the farms.

Or will they ravage the farms, sell the land to NZers after a decade or two at inflated prices, divert profits to a tax haven and employ only Swedes?

I take it from your comment that you wouldn't sell your house to the highest bidder if they were non resident?

No! My house is part of my farm, and it's not for sale. I'd love to buy another farm, but it's just way out of my price range today.

Isn't this old news? When did this settle?

Did the OIO approval impose any caveats like they did with Shanghai Pengxin? Can think of one simple caveat: not allowed to extract untaxed profits in the form transfer payments to Sweden as "management fees" as per Google, Starbucks, Apple, etc.

When it's all sold to foreign investors, then what?

It's a sad day when any of our land is sold off overseas.

1) These "farms" have been for sale for years, and are dogs.
2) Wonder how much Townshend got to get the deal over the line?
3) Wasn't Cedric "the entertainer" Allen representing Shanghai Penqxin on the Crafar deal?

If they are dogs then why didn't the OIO require them to bring them up to scratch. Shanghai Pengzin had to undertake to spend $20 million in addition to the purchase price in improvememts. Good for the goose, good for the gander. Seems inconsistent.

Ex-All Black? Who is hooked up to whom?

The globalised real estate market benefits buyer, seller (and financial institution) but isn't helpful for those trying to buy farms or homes. It wouldn't matter where countries have comparable assets and income levels, but in China's case they have the world's largest population and are facing food shortages.

Bet no one can come up with a good solid argument as to how it benefits other than those above?

Well, wearescrewed, the penny may fall with govt when all our farmland is sold to foreigners.
Perhaps then they will realise the error of their policies that have placed us in this position, but don't hold your breath!
liberte

Thank goodness for Landcorp and Rural Equities.

Well, these farms have been for sale for a long time. No one on NZ wanted to buy them - so, of course, they then come up for sale and we have overseas inverstors. For those of you who think we shouldn't sell land to offshore entities, what should we do if we can't get a NZ sale? So, Bud Fox, would you be prepared to give it away?

The percentage of land owned by overseas interests is very small. Let's not make a mountain out of a molehill. At least these sales keep our land values up. If there were to be a crash here what would happen to all the farm values around it? Knock, knock, bank manager!

That gal - good to finally get some sensible comments
issue is. Will capital be good for NZ (more production, employ more Kiwis), will fair taxes be paid, will they supply existing players, will they be good guardians... If the answers are yes, then good on them. There are no shortage of farms for Kiwis to buy if they want to put their $ where their mouths are. Previous attempts to raise money from such concerned Kiwis (Synlait, PDI) have failed.

No one on NZ wanted to buy them...

No one in NZ wanted to buy them *at that price*. Yours is the same argument used by Harcourts and Baileys when they say "NZers can't afford these prices", as though markets trump the rights of the citizenry.

I'm with you on this one, darling.

How come we don't hear of this on the news? No hoohaa like the Chinese buyers?

Why is the OIO inconsistent in granting consent? Why have they imposed strict conditions on Pengxin but not on the Swedes? The OIO is a seriously flawed agency and the govt is letting it do what it wants. The OIO bureacrats are very clever at fudging to the ministers, especially Bill English and his merry henchmen, and they are too dumb to know that they are being misled by the clever "muppets" at the OIO. Time to get rid of the OIO as they are so inconsistent in their decision making. Let the OIO consent to sell all NZ farmland to foreign investors and when all the farm land is sold, the OIO will have little to do but twiddle their thumbs and say "woe is me, it's the govt's fault because they did not change the Act and so we just interpreted the Act to acccord with govt policy to sell NZ assets to foreigners". It's a sick joke and this govt is too scared to change the Overseas Investment Act for fear of losing the elections!