National to offer young farmers to buy Landcorp farms

Last updated 14:42 14/09/2017

Moving romney ewes from the hills of Landcorp's Haycocks Station at Mavora Lakes for an annual stocktake.

Landcorp's Jericho Station in Southland is the centre of controversy because a Chinese bidder wants to buy it, but a would-be local buyer has offered close to the same sum.
National has announced Landcorp farms will be offered to young farmers.

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National will direct Landcorp to offer farms to young farmers because "there is no clear public good coming from Crown ownership and little financial return to taxpayers".

Primary Industries Minister Nathan Guy said the young farmers would have to "work the land" for five to 10 years, after which they could lease the farms before buying them.

It was envisaged about 100 young farming families would benefit from the programme.

"Not all of Landcorp's around 140 farms will be sold. Many are subject to Treaty claims and others have a right-of-first-refusal for Iwi – and these rights will of course be respected. Some of Landcorp's larger farms will be divided into smaller units more appropriate for first-time owners," Guy said.

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Federated Farmers president Katie Milne said it was an "exciting prospect" for young farmers.

It was a slightly "back to the future" policy because in the days of the Department of Lands and Survey farmers went into a ballot each year for farms.

"I know of a few farmers who won the ballot and were able to buy a farm. I remember when my father and mother used to enter the ballot every year, although they never won anything."

Milne said it would be interesting to see how it would unfold. She would not comment on Guy's view about the financial performance of the state-owned corporation, except to say it was exposed to the vagaries of the market like all farmers.

"But we have challenged Landcorp over taking on sharemilkers because that's a way for young people to get equity and buy a farm. They decided to employ managers instead."

Labour's Primary Industries spokesman Damien O'Connor said it was not his party's policy.

"We expect caveats on the sales so that farms can't be on-sold to foreign buyers. Labour believes Landcorp has the size and expertise to lead innovation across the agri-business sector and we don't want to undermine that."

While 100 farmers would benefit, there were "thousands" of others who needed assistance to buy their own farms, O'Connor said.

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Green Party environment and primary industries spokeswoman Eugenie Sage said the sales risked land falling into overseas ownership, and worsening water quality. 

In recent years Landcorp had focused on improving its farms' environmental performance by forming an environment reference group which showed it was serious about reducing pollution. 

"Landcorp can lead the shift to environmentally sustainable farming. Its farms are a public asset we should be keeping, not selling them for overseas buyers to purchase sometime in the future," Sage said.   

Guy said there would no time limits on when the farms could be sold by the new owners, although because they had invested years in developing them during the leasing process, they would be less inclined to sell them.

Landcorp is New Zealand's largest farmer, running about 140 farms the length and breadth of the country. It has 700 staff, with an average of six per farm. Guy envisaged some of those staff might be interested in applying to buy, and others might want to work for the new owners.

Last week it announced an after-tax profit of $51.9 million compared to the year before of $11.5m, but did not offer a dividend to the Government.  

Guy said the young farmers would have the opportunity to buy the farms "at market rates" when they had built up enough capital after leasing them.

The farms would be awarded on a lease-to-buy arrangement, with leases awarded by a panel and ballot, and prioritised towards young farmers who had experience at running a farming operation, and had not already had sole ownership of one before.

The leasee would be required to work the farm continuously themselves for at least five years before being able to buy it, or longer if they need more time to build up capital.

New Zealand Young Farmers chief executive Terry Copeland said the announcement was great news.

"We welcome any opportunity for young people to get access to farm ownership. There's been significant barriers in recent years with the high cost and limited opportunities to get into the farm ownership model and I can see this as being a very positive thing for the next generation of farmers coming through."

"The mechanism to lease first and build up some expertise and some profile before buying in is a very smart move."

The fact the farms would be ex-Landcorp farms was seen as a positive, Copeland said.

"Landcorp farms are well managed. They have had some very good staff and people in charge of those farms and I think they won't be inheriting nightmares in terms of poor facilities."

Landcorp was approached for comment but refrained from doing so. 

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- Stuff


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