Crafar Farms sale approved

02:10, Jun 11 2012
SIR MICHAEL FAY
SIR MICHAEL FAY: "These farms are going to be more successful owner-operated."

A rival Kiwi bidding group for the Crafar farms has slammed the Government's approval to sell the dairy farming estate to a passive overseas investor "with no dairy expertise or background".

"It's a bad day for New Zealand", said Sir Michael Fay, a member of the Kiwi bidding group. "Three out of every four New Zealanders are against selling these farms into foreign ownership."

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman this morning announced they had approved the new recommendation of the Overseas Investment Office (OIO) to grant consent to the Chinese-owned Milk New Zealand Holding Limited to acquire the 16 Crafar farms.

Maurice Williamson.
MAURICE WILLIAMSON: "We have carefully considered the OIO's new recommendation".

Fay said the decision was "wrong" and not good for the economy.

"It shows the Government has no commitment to the people who live and work in the rural sector. Sixteen dairy farms - an area the size of Hamilton - and a minimum $20 million per year of Fonterra milk payouts are lost to the Central North Island economy for good.

On the flip side, a Chinese official says Kiwis should "be happy" that foreigners want to buy land and invest here.

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While the Chinese Embassy's political counsellor Cheng Lei said he did not want to comment specifically about the approval, he said many countries were interested in spending money here.

"I think Kiwis should understand that [foreign investment in general] is a positive signal. It showcases foreign countries confidence in your country, in your system, in your people and you should be happy about that."

Cheng had previously suggested declining the Crafar deal would make others question investing in New Zealand.

Cheng said China also welcomed foreign investment on its shores and it did not matter whether firms bought land there or not.

'END OF A MARATHON'

Victorious bidder Shanghai Pengxin said today's approval from the Government was "the end of a marathon".

A spokesman for the Chinese company, Cedric Allan, said it has been a year-long haul, and at times trying, but the Government green light today was not a surprise.

"We've always known we had a strong case particularly compared to other land sales to foreign buyers offering less benefit to New Zealand," Allan said.

"At long last it's now a matter of getting on with the job, settling the transaction, taking possession of the farms and with Landcorp, starting to upgrade these farms."

Pengxin had committed to spend around $1 million upgrading each of the 16 central and lower North Island farms, Allan said.

"This is quite a significant amount for the local communities. We will be talking to neighbours and iwi and we have a list of 100 people and organisations wanting to with us. Once we are owners of the farms, the whole scene changes, we can get on and talk to them."

The 16 farms have been in receivership for more than two years.

Allan said the offers of help were from farm consultants, people who had worked on farms in China, and people in the dairy processing industry.

He said contrary to rumour that Pengxin would now sell two farms at Benneydale in King Country to local iwi, "absolutely no commitment" has been made.

DECISION 'CAREFULLY CONSIDERED'

"We have sought to apply the law in accordance with the provisions of the Overseas Investment Act and the guidance of the High Court," Williamson said.

"We have carefully considered the OIO's new recommendation."

The OIO sought advice from Crown Law and independent legal advice from David Goddard QC. The Ministers also sought advice and clarification from Goddard.

"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."

Milk NZ was set up by Shanghai Pengxin to operate the farm alongside the Government-owned Landcorp. In January, the Government approved the recommendation of the OIO for the Chinese conglomerate to purchase the North Island farms for a sum believed to be around $210m.

But the approval was successfully challenged in the High Court by rival bidders the Crafar Farms Purchase Group and sent back for reconsideration.

Today's latest decision to approve is still unlikely to put an end to dispute over the deal, with CFPG keen to challenge further legal aspects of the approval.

But Coleman said the updated consent for sale came with "stringent conditions" for the buyers.

"These 27 conditions have been imposed to ensure Milk New Zealand's investment delivers substantial and identifiable benefits to New Zealand," he said.

The conditions required Milk New Zealand to invest $16 million into the farms and to protect and enhance heritage sites.

"The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial."

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