This article by KPMG comments on foreign ownership of farm land and warns the government about changing the rules for political expediency.
They believe high prices for our land, and high costs of production in processing the goods it produces, will keep foreign ownership in NZ low.
They also note that both Fonterra and Zespri are developing global product sourcing strategies to secure year round supply to meet the markets.
With both Alliance and SFF also looking to source product from overseas, it would seem hypocritical to restrict other businesses to do the same.
One point they make, is recognising the high price of farm land is a deterrent to young farmers.
Foreign ownership, they suggest could provide opportunities for the development of equity partnerships for young farmers to create entry equity in land.
Fears foreign interests have been mounting a major land grab in NZ, have been shot down by global accountancy firm KPMG in its latest report into the agricultural sector.
Applications before the Overseas Investment Office offered no evidence to suggest NZ was a target for significant inbound investment from overseas governments reports The NZ Herald.
The high price of quality rural land and our position in relation to the rest of the world meant we were unlikely to be at the top of the list of preferred destinations for most foreign land investors, KPMG's head of agribusiness Ian Proudfoot said.
"NZ has some significant agricultural advantages which prima facie would make our land attractive to international investors; in particularly the fact that we have substantial fresh water resources by global standards and that product produced in NZ has a clean, green, sustainable brand attached as a result of its origin."
However this was balanced by the cost of pastoral land in NZ, which was expensive by developed world standards, our isolation, and high production costs.
"Foreign investment offers the potential for us to maximise the value of our land," the report says. The report also found NZ agribusiness companies have the opportunity to benefit from adopting global sourcing strategies.
"It is our belief that a key part of the transformation that needs to occur in New Zealand's agricultural sector is encouraging agribusiness companies to follow Fonterra and Zespri's lead in developing global product sourcing strategies."
KPMG, however, recognised the high price of land here was a deterrent to getting young people onto the land and investing in farms. "Part of the solution relates to the development of schemes that link young farmers with potential equity investors, be they domestic or international, to create equity partnerships that provide an entry point to the farm ownership ladder," KPMG says.
14 Comments
"The high price of quality rural land and our position in relation to the rest of the world meant we were unlikely to be at the top of the list of preferred destinations for most foreign land investors."."
If this is the case, why are Chinese investors taking out full page adds in the newspaper to try and convince people that it is OK to sell the 16 Crafar farms to them. Something doesn't quite add up with the KPMG argument.
Micks "why are Chinese investors taking out full page adds in the newspaper to try and convince people that it is OK to sell the 16 Crafar farms to them."
It's all about market control Micks. They talk about ensuring supply, market access blah blah blah. Absolute nonsense, we can supply all the dairy they want, no problem, they don't need to own the farm.
The Chinese should stick to what they do best - making toxic tat. We'll do the dairy thanks.
And so thought the Americans back in the 1980's when rich Japanese businesses bought great chunks of Manhattan's premier real estate . ................ Decades later , much of it is back in the locals' control , and the prices paid by the extravagant Japanese have still not been reached .
Anonymous : Precisely ! Who are we to deny them their folly . No problem to take their renimbi / yen / shekels , and pay down our debt . When the May Wang's go belly up , we can oblige them by accepting back the properties at 50 .....40........ 30 pennies in the dollar .
The Canadian pension fund who took the Yellow Pages off Telecom , would gladly take 50 cents / $ to be rid of it ...............Ha ha de ha !
As Brian Gaynor wrote in the NZ Harold , if we had kept the compulsory super scheme of 1975 , we'd have in excess of $ 240 billion in accrued savings . This would've been a rich little country , a South Pacific " Switzerland " .
But we didn't do that ! Voters agreed to Muldoon's " fist-full of dollars " , and cashed it out after just 37 weeks of it's implementation .
We have struggled for capital ever since . And much of it has come from overseas , rather than from internal saving .
And that is why today , we are reduced to selling our productive enterprises to foreigners . It is our own stupid fault .
You're right of course Bob but what I think Anon was saying is ; sell all the farms dairy factories etc to overseas owners and we'll see how the urban economy copes. Seems to me our cities aren't pulling their weight in terms of exports, big on the consumption side of course but that is the reason we need to borrow overseas - it is totally due to our trade deficit.
Savings rates on their own are really a bit of a smoke screen, decades of trade deficits are the reason we have nearly 100% GDP owing to overseas banks. Welcome to serfdom.
Too true Anon, the power of trade.
The cities that the farms supply are more likely to be on the other side of the world though.The rural farm production, forests, fisheries, aquaculture, horticulture and most tourism could carry on regardless.
As far as our Kiwi cities are concerned, how are they going to pay for their consumption - the vast amounts of manufactured goods and resources that pour in daily. They've changed, they used to be much more productive, now they're the weak link in the Kiwi economy.
Is that the best you can do Anon?
Of course the rural areas need the city markets, where ever they are, I'd already covered that.
What is of concern is the economic performance and competitiveness of our major cities. You talk about lack of investment outside agriculture. Firstly, there is huge MAL-investment in our cities - it's going into shopping Malls, expensive housing, cars and boats and fluff basically. Secondly, the overall lack of investment is symptomatic of a draining of wealth through excess consumption, particularly of imported products - result we owe to much to overseas banks.
I was reading the SST, Rod Oram has an essay in there that touches on these issues. "Super City debate overlooks wealth" well worth a read, you might learn something.
Some of his findings and comments:
"to be blunt, the Auckland economy is weak and astonishingly domestic".
"The export picture is even worse They [Auckland export companies] accounted for 9% of regional GDP in 2001 but only 8% in 2008. Worse the factors that helped Auckland achieve even this mediocre performance are fast running out."
Get your act together Auckland.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.