Landcorp ready to run Crafar farms

ANDREA FOX
Last updated 14:41 09/11/2012
Crafar farms
Fairfax NZ

GOOD GRAZING: The Crafar farms are carrying about 14,000 milking cows and are expected to produce about 4.6 million kilograms of milksolids this season.

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State farmer Landcorp says its Chinese client Shanghai Pengxin will settle the Crafar farms purchase with receivers on November 30 and it is scheduled to start managing the dairy farming estate the next day.

Landcorp chief executive Chris Kelly said that to the best of his knowledge this was the timetable that would mark the end of the tortuous three-year Crafar farms sales process.

Landcorp's management of the 16 central North Island farms is a condition of Government consent to the controversial sale to the Chinese company, which has waited through a string of court challenges and consent processes to put its money on the table as receiver KordaMentha's preferred bidder.

Kelly said the biggest job ahead of Landcorp was building relationships with the farms' 75 staff "who have had a very difficult time". "There's no doubt they have been capital constrained."

Kelly said the workforce included 14 lower-order sharemilkers and their staff, and up to three managers. The sharemilkers were contracted until the end of this dairy season which ends in May.

Between takeover and the end of the contracts, Landcorp would discuss future contracts with staff and sharemilkers, he said.

Other challenges would be getting to know the farms, doing due diligence for Landcorp's intended purchase of the estate's 16,500 livestock under the sharemilking agreement forged with Pengxin and ensuring there was enough supplementary feed for winter.

As part of the purchase price, understood to be more than $210 million, Pengxin will buy the farms' shares in Fonterra which will collect milk from the farms.

Kelly said there were about 14,000 milking cows on the farms as well as heifers, replacement heifers and calves. The farms were producing about 4.6 million kilograms of milksolids a season.

Landcorp's role was that of a "high-level" manager fulfilling the role of an owner, he said.

This would include managing the $15.7m Pengxin has committed to invest in the farms over three years - about $1m per farm - budgets, capital expenditure and invoicing, Kelly said.

The Crafar farms, once the biggest family-owned dairy farming estate in the country, went into receivership late in 2009, with the Reporoa-based Crafar family owing financiers and banks $200m.

The receivership also followed animal welfare investigations and environmental law breaches.

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