See the release from Labour:
Labour says the latest application by foreigners to buy the Crafar dairy farms at mortgagee sale should not proceed.
Economic Development and Associate Finance spokesperson David Parker says Labour would make changes that would prevent such sales proceeding.
“New Zealand’s farmland is of strategic importance to our economy and must be protected,” David Parker said.
“Federated Farmers says the sale will be the ‘acid test’ for the Government’s ‘revised’ rules on overseas investment in New Zealand farmland, but calling it an ‘acid test’ is an irony as National seems determined to allow New Zealand’s productive assets to be sold off piece by piece. Farms and the State-Owned electricity companies are on the block.
“What happens when all the family silver is sold? It seems National is happy for New Zealand to be milked. It lacks a credible economic plan to grow the New Zealand economy to create new jobs and incomes New Zealanders need.
“The sale of the Crafar farms, if it proceeds, will further show to New Zealanders that the future under National looks bleak,” David Parker said. “Sadly, it is already clear the Government is likely to agree to the sale.
“The Government already had the right to turn down farm sales under pre-existing rules, but the problem is that they generally don’t.
“The latest rule change was accompanied by a letter from Bill English to the Overseas Investment Office saying the National Government is happy to allow farmland up to 10 times the size of the average farm to be sold to the same buyer. Ten times! It shows the Government is happy to see New Zealand land sold off in big chunks to foreign buyers.
“We are amongst the world’s best farmers,” David Parker said. “Selling off our dairy farms to an overseas buyer who can pay more than a New Zealand farmer will not make New Zealand wealthier.
“Losing control of our productive base makes us poorer, not richer.”
10 Comments
National have indicated that they are very concerned about any large purchase of land with the intention of vertical integration. This is where I see the potential for this sale to be disallowed. The applicants have stated they will not set up a processing plant and will supply Fonterra in the interim, BUT are in talks with a nearby processor in regards to the making of product for the China market.
The terms of any such agreement will require close scrutiny from the OIO to see if it is in fact intending to be a vertically integrated company. The Crafar farms are geographically spread which makes any talk of having their own milk processed in to their own product somewhat interesting. Will we see a divesting of some of the farms on the fringes and a purchase of new farms to create a cluster? Having once had approval from OIO to purchase land, it will be more difficult for the OIO to turn them down on a second application.
It will be interesting to see what happens. I don't believe it is a done deal either way.
Agree with you Casual Observer, if OIO approvesale it will be the start of NZ inc becoming a satellite for China, instead of military expansion policies China will be engaging in economic expansion.We should be investing in our own means of production.NZ superfund should buy thefarms and ballot them to young aspiring dairy entrants.
While I don't feel comfortable with selling arable land to foriegn interests and I think that the banks should take a haircut on Crafar farms as their lending was reckless, I am interested in what the alternative is.
I assume we are proposing nationalising the farms by getting LandCorp to purchase. However, this purchase will need to be made via foriegn debt, most likley from Asian soverign wealth funds. Just add it to the plastic card.
Remember that Dairy Holdings farms will come onto the market very soon. Assume that the proposal is for LandCorp to purchase these aswell.
LandCorp will be under political pressure to not offer a discounted price that could result in a mark-to-market of land values, which could trigger fears over the capital adequacy of the banks.
I am also concerned having the Government (aka the taxpayer) as the buyer of last resort creates a moral hazard.
Casual Observer - are you a supplier of Fonterra? I agree that the sale of Crafar Farms to foriegn holders would be a significant issue for Fonterra and its shareholders. Fonterra's biggest concern is competition for domestic milk supply. Foreign owners, particulalry Asian owners have deep pockets and a long-term horizon so will be abig challenge.
Re. CO, you may be right about the SuperFund.
However, remember that the SuperFund is also debt funded (albeit indirectly). My issue here is that we are borrowing in short-term foreign markets to invest in long-term illiquid assets.
Last night S&P put the US on a debt warning and the European sovereign debt issues are esculating again. If the US loses its AAA rating, the financial markets will be in for a big shock. The cost of dent will skyrocket.
Soveieign debt is going to become the destructive force before the year is out. While our Govt dent is relatively low, it is ballooning out and add in private debt and NZ is one of the most indebted country in the OPEC.
This Question of N.Z. agricultural land being allowed to be sold to people residing outside our country and not bona-fide N.Z. citizens appals me.Because the world has suffered financial dislocation with rampant carelessness on astute business and management practices N.Z appears by colomunists Goverment spokesmen and those with vested interests to be fragile and vulnerable. What a lot of crap !! IF those folk don"t stand strong, resolute and committed to our future {New Zealanders I am talking about ) they will regret forever the loss to wealthy overseas humans who will exploit for their own greedy needs our richest resources that continue to survive and replenish the country with revenue and may I say pride in achievements that so many hard working people across the board have worked their guts out today and in the past. I say Wake - Up New Zealand and hold on and cherish and help keep a viable thing alive.
The Crafar farms debacle with receivers managing them has been a financial disaster for the tax payer as their costs have been escalating because of their unwise decisions not to sell the farms privately at a reduced cost to young keen men and women who by being rigouresly assessed could qualify to own and work them and pay for them in time .To just be so money orientated in this country just hasn;t worked - some folk are so greedy they just don;t want one or two farms they want a whole lot- our young people don;t stand a chance while Landcorp and some wealthy private people etc sew everything up, but at least Landcorp and our Superannuation fund are N.Z. owned are they not or will they be sold to the highest bidder too !!??
I beleive the most shocking injustice was done to Allan Hubbard by the interference there and look at the fall out over that and anquish it caused a great old New Zealander who cared about his country and fellow countrymen, I cannot forgive those in power to have not been more careful in the first instance about dishing out Goverment Guarantees to this one and that one before carefully assessing their businesses . Too late gunning them down afterwards..
Happy Easter every-one.
Very good article from Bryan Gaynor.
http://msn.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=107…
That's it for me I'm not voting for National anymore if they are going allow this sort of stupidty to happen.
Gaynor hits it on the head, why else would they want to buy our farms other than to ensure they can get our products for much cheaper than they would overwise.
The stupidity of the idiots that support this sort of thing never ceases to amaze me.
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