Chinese pitch a 'keep it Kiwi' bid

KEEPING IT KIWI: The new Chinese bidder for the Crafar farms has promised to keep strong a New Zealand involvement in the estate.
KEEPING IT KIWI: The new Chinese bidder for the Crafar farms has promised to keep strong a New Zealand involvement in the estate.

Election year could torpedo a Chinese property magnate's application for Government consent to buy the Crafar farming empire, say opponents of the bid.

Save our Farms, a group opposed to agricultural and horticultural land being sold overseas, said most Kiwis would not support the Crafar farms sale to Shanghai Pengxin Group, which yesterday lodged an application with the Overseas Investment Office for consent to buy the 16 central North Island dairy farms in receivership.

"New Zealanders don't want our productive land sold overseas. We are marshalling our forces and there is an election coming up," said group spokesman Tony Bouchier.

Possibly with this in mind, Pengxin's advisers have written the application with a strong "keeping it Kiwi" theme.

It promises New Zealanders will be on the company board managing the farms and that current staff will be retained. Rather than build its own processing factory, the company plans to work with local processors.

The conditional purchaser of the 8000-hectare estate says it has taken advice from New Zealand farm and environmental consultants farm by farm to ensure the credibility of its plans.

The application is in the name of Milk New Zealand, a fully owned Hong Kong subsidiary of Shanghai Pengxin, whose only director will be Pengxin chairman, property magnate Jiang Zhaobai. The company would spend more than $200 million buying the properties and related assets and upgrading the farms in the first two years.

Initially the company would supply its milk to Fonterra, but the aim was to add value to the farms' milk by developing new products for export to Asia, particularly the Chinese market.

More than $100 million would be invested in marketing its products over the first five years, capitalising on Pengxin's business contacts and local knowledge in China, the application said.

Milk New Zealand would establish a fully owned subsidiary, Milk New Zealand Farming, to run the farms, the application said. Two of the three directors would be New Zealanders with dairy industry experience.

Sharemilkers and workers running the Crafar farms for receiver KordaMentha would be retained, advised by a team of professional Kiwi farm consultants, who in turn would work under the direction of a New Zealand general manager of Milk New Zealand Farming.

An upgrade programme would be implemented on each farm, the application says. The aim was to increase milk production by more than 10 per cent by the end of the third year.

Federated Farmers dairy chairman Lachlan McKenzie said the application's emphasis on farm upgrading was concerning.

KordaMentha claimed to have poured millions into the rundown Crafar farms since it was called in by banks in October 2009.

"It's a hell of an indictment on the receivers. We know production is considerably lower now than it was."

The federation was not against foreign investment in New Zealand but was concerned laws such as the Dairy Industry Restructuring Act forced Kiwi company Fonterra to provide milk to foreign-owned dairy companies.

BusinessDay.co.nz