'Foreign sale of little benefit' - farmers

17:00, Aug 04 2014

Farmers have got in behind opposition to the sale to a Chinese company of the 13,800-hectare Lochinver Station, near Taupo, for $70 million.

Federated Farmers is the latest to wade in after opposition from Conservative Party leader Colin Craig, NZ First leader Winston Peters and Labour leader David Cunliffe to Shanghai Pengxin signing up to buy the station.

Pengxin owns the Crafar Farms and a stake via another company in Canterbury's Synlait Farms.

The sale of Lochinver, put up for tender in December last year by the Stevenson Group, is awaiting approval from the Overseas Investment Office.

Federated Farmers said it supported positive overseas investment in New Zealand's farming system, but was concerned there would be little benefit to New Zealand if the sale went through.

President Dr William Rolleston said the organisation was "frankly uneasy" about the station being sold to Pengxin.

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"New Zealand absolutely needs foreign investment, but it has to be of benefit to the local and national economy. That is why a ‘substantial and identifiable' benefit test was incorporated into the overseas investment decision tree," Rolleston said.

The benefit test was introduced to ensure any investment had benefit over and above making a farm work better.

"Since Lochinver Station is highly regarded in farming circles there must be something very special and we are keen to know what that is.

"Given the location of these farms to Shanghai Pengxin's other landholdings, it will increase speculation that vertical integration by way of processing could be on the cards."

The Government in 2010 tightened the rules around foreign ownership by introducing an "economic interests" factor in the Overseas Investment Office's (OIO) consideration.

Rolleston said the OIO rules would be tested as the station was three times the land aggregation trigger level, excluding land Pengxin held in the former Crafar farms portfolio.

"Yet this proposed sale and the commentary around it, again highlights the need for research into what the extent of overseas investment in our farmland is," he said.

"Last year, Federated Farmers wrote to ministers requesting research into the extent of overseas investment in farmland. We understand ministers were concerned at the potential cost, but the economic price of getting foreign investment rules wrong outweighs this."

Australia was ahead of New Zealand in this area with its National Farmers' Federation working with the Abbott Government on a farm register, he said.

"The reality is that here, no-one knows how much of our farmland or housing is foreign-owned. To base critical economic policy decisions around a hunch is unacceptable," he said. "We also hope the OIO will be able to share what the ‘substantial and identifiable benefit' to New Zealand is with the proposed over- seas sale of Lochinver Station."

Prime Minister John Key yesterday defended the sale of farmland to foreign buyers, saying Pengxin had "dramatically improved" the Crafar farms.

Pengxin bought the 16 Crafar farms, about 8000 hectares, in the central North Island, in 2012 for $200m. Fairfax NZ

Waikato Times