PM admits 'concern' about sale of Crafar farms

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Prime Minister John Key has broken his silence over the controversial bid by a Chinese consortium to buy the Crafar farms, suggesting his personal discomfort over the deal.

In comments to The Dominion Post before his departure on a 10-day trip to Asia today, Mr Key said he "wouldn't want to see a wholesale sale of New Zealand's land productive sector".

Asked about opposition to the Crafar farms deal, he said there was public resistance to foreign investment in New Zealand's primary export base.

"And that is probably less related to the country involved – in this case China – and more around the fact that there is a genuine concern that we shouldn't sell out the golden goose."

In May, Mr Key slapped down Agriculture Minister David Carter for saying the deal was "unlikely to go through".

But he now says he does not believe the sale of "very large tracts of land" to foreign investors would be in the long-term interests of New Zealand.

"Now, that is a difficult thing to control because the Overseas Investment Act won't stop individual farms being sold but it can provide some support around very large tracts of land. I acknowledge that it's quite difficult."

The 16 Crafar dairy farms, which cover about 8000 hectares, were put in receivership in October last year.

Natural Dairy, a Chinese consortium fronted by New Zealand-registered company UBNZ, has an agreement with receivers KordaMentha to buy the farms.

The agreement is subject to approval by the Overseas Investment Office (OIO). It has been suggested the Chinese have offered $210 million for the farms.

State-owned enterprise Landcorp has also been negotiating to buy them and has said it will put in "a realistic offer" before tenders close next Wednesday.

The OIO will make a recommendation on the sale to Associate Finance Minister Steven Joyce and Land Information Minister Maurice Williamson. The ministers can veto a sale.

Mr Key suggested he would be concerned if foreigners could buy large swaths of land, but less so if they bought only one farm.

Fonterra, which collects 97 per cent of New Zealand milk production, is a co-operative owned by 12,600 farmers. "The Fonterra model is based around, basically, an individual farmer and not a corporate farm model," he said.

Mr Key will meet Chinese Premier Wen Jiabao in Beijing next Wednesday.

He will also meet Korean President Lee Myung-bak in Seoul and Vietnamese Prime Minister Nguyen Tan Dung in Hanoi.

"The challenge for New Zealand isn't so much about do we open up New Zealand to be sold to the rest of the world, but can we as a country sell more to the rest of the world," he said.

- © Fairfax NZ News