Content supplied by Federated Farmers
When it comes to the foreign ownership of farmland my family has a unique perspective.
Before my wife and I moved our family thousands of miles from upstate New York to the Wairarapa, we did research.
A great deal of it.
We’d narrowed our choices to English speaking Canada, Australia and of course, New Zealand. Adding a new language, when you are moving thousands of kilometres, adds too much complexity.
Since moving downunder, we’ve learned that being a “good b..tard” is a complement. Maybe Winston Churchill was right when he said “Britain and America are two nations divided by a common language”.
While Emily was the farmer, I was an investment analyst. Together, we learned more about the country, its political stability, history, economy, agricultural system, climate and the rural property market.
Of course, being ‘foreign investors’, we checked out whether we’d be welcomed or not.
We quickly dropped Canada from consideration for being even colder than New York. We also wanted to break out of the closeted subsidy culture prevalent in North America. While Australia offered space aplenty, dealing with years of drought followed by floods was a challenge too far. Our preference was for New Zealand’s more benign climate.
To farmers overseas, New Zealand is the mecca of farming.
Nowhere else had an organisation like Federated Farmers worked with a left-wing government to end subsidies.
Farmers there, we learned, were judged on their abilities as farmers and not the size of their subsidy cheque. New Zealand was at the forefront of pastoral research and practice too. It also had plenty of migrant farmers who had integrated and excelled. New Zealand felt right.
Being in Federated Farmers a few years later, I came across one farmer who made Winston Peters look like a weak-kneed liberal. Proving the debate is seemingly two-thirds heart and one-third brain, I later learned that he’d bought a farm in Australia but he still opposed foreign investment, albeit, slightly sheepishly.
Deciding on a country is one thing, but it’s quite another to get the ideal farm. We were very fortunate to convince Castlepoint’s Board that New York Yankees were fit custodians for their iconic Wairarapa station. That was 1998 and we’ve never looked back.
Kiwis are the most hospitable people with an unerring knack of convincing you to take on more responsibilities. I was one of two non-New Zealand born farmers on the Federated Farmers National Board. I’m also on the Board of Grow Wellington and to keep my feet firmly on the ground, I’m also Castlepoint’s Fire Chief. Emily is similarly involved and our children are now working in New Zealand.
Politicians are quick to say that families like us are their ‘ideal’ business migrants. The message is that ‘people like us’ will continue to be welcomed, whichever party wins on 20 September.
Unfortunately, that nuance is lost if you’re thousands of miles away reading nzherald.co.nz or watching news on-demand. The streaming of talkback radio means Albany, New York can listen to ZB just as easily as someone in Albany, Auckland.
If we were researching New Zealand, today, would we make the biggest of big moves? Possibly not.
The tone around foreign investment has hardened for the worse. To outsiders, politics and cultish popularity now seem big determinants.
There’s also a nasty undercurrent which reflects poorly on us as Kiwis. Who this is putting off we’ll never know, but it is off-putting.
Farming is the most international industry we have. It’s this mix of people that makes New Zealand agriculture unique and the success it is.
The Green Party opposed Shania Twain’s High Country purchase but look at what British record producer Robert "Mutt" Lange has given back; 53,000 hectares and a whole landscape permanently protected.
The restoration and enhancement of Young Nicks Head would never have taken place had a Kiwi farmer purchased it rather than New York financier, John Griffin.
We’re even near neighbours of James Cameron, that’s in a rural sense because we’re over an hour away by car.
Politics must come out of the ‘foreign investment’ debate because it can so easily spiral into the gutter.
Rules are important and we Kiwis accept that with sport, why not overseas investment?
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Anders Crofoot is Federated Farmers Vice-President
87 Comments
Immigrants who want to come here to live and buy farms and support local communities and nz farming, will allways be welcome. Large Multinational companies who wish to gain a controlling interest of NZ farmland should not be allowed. NZ farmland should be getting cheaper, the dairy price has dropped by 40%, no one wants to take less for selling their farm, so they look for overseas investors to prop up the market. So what happens is that young NZ farmers will end up paying too much buying farms, and as a result the farms suffer from a lack of investment, because they are bogged down with debt. Therefore speculative investment should be discouraged.
As I said on the Herald forum of this article, can you see Shanghai Pengxin joining the volunteer fire brigade or Harvard Management at the neighbourhood barbie calling someone a good bastard?
You totally missed the point, the objection is to foreign non-resident owners (and that is owners, not investors, some of us know there is actually a difference)
the objection is to foreign non-resident owners (and that is owners, not investors, some of us know there is actually a difference) How do you differentiate between a non resident owner and a non resident investor? What in your mind makes a non resident investor more appealing than a non resident owner? Are they not one and the same?
raegun, So you are happy for MyFarm to continue on their merry way puting together farming syndicates made up of foreign 'investors' to buy up farms that are of the smaller size (in Southland they seem to target the 4-600 cow farms). These sized farms are exactly what young NZ farmers would be looking to buy, not the ones the size of Lochinvar. I totally disagree with you on that.
As cowboy says, a person who owns shares in a company is an owner in law. You imply a shareholder is not an owner - incorrect. So the Swedish fund that spent $60m buying Harts farms a couple of years ago is ok because they are investors, not owners because the fund is 'owned' by the people who put their pensions in to it??
http://www.nbr.co.nz/article/what-swedish-fund-paid-hart-farms-dw-137051
As a farmer, I have far more concern over 'investors' owning NZ farm land, than I do individuals. The ability to pool their equity usually means smaller debt so a higher price can be paid, making it harder for young kiwis.
No I absolutely and utterly do not want a bunch of foreign investors owning NZ farms!! In fact corporate farming, fullstop, pretty much leaves me cold.
I just get fed up with the soft term "investor" used to throw people of the scent of what is really going on.
Now a question for you, how much foreign ownership of farmland in NZ do you reckon is about enough, at what point do we put the skids under it?
raegun, speaking as a dairy farmer, I would like to see no foreign investor syndicates such as MyFarm puts together, to be allowed to buy NZ dairy farms less than 501ha. MyFarm have made not insignificant issues for young farmers in Southland wanting to step up to farm ownership as they are directly competing with young kiwis. I have no issue with people like Anders buying a farm with the intention to live in NZ. He walks the talk and is a NZ citizen. I doubt a kiwi would have given 95% of the farm to QEII like Robert Lange has, so foreign ownership isn't always bad.
One issue that isn't talked about much is that with an aging farmer population there may simply not be enough young farmers coming through to buy the farms that will come on the market over the next 20 years. (For a start, think Waikato with approx 4000 small(ish) farms whose value almost make it impossible for a young family to make a living off it due to debt levels that would need to be incurred.) I believe that is why there is a very strong push from the dairy industry for farmers to consider succession issues. The industry wants farms to remain in kiwi hands. I know one young(ish) dairy manager earning $180k. He says he has no desire to own a farm as with the money he makes he can invest in whatever he fancies, is guaranteed min 4 weeks holiday, receives paid sick leave and gets every 2nd weekend off. He would get none of that as a farm owner/operator.
Do I want to see NZ farmland majorly owned by foreign interests, no. However there are undercurrents at play in the industry, one of which I outlined above that needs to be addressed if we are to encourage more young farmers to aspire and achieve farm ownership. Though sometimes I wonder why they would, when there are other, easier options out there.
They are never going to make farming a career if all their hard work and sacrifice of some sort of social life will only ever lead to more of it, with no hope of ever owning their own farm. Allowing land values to become so far out of their reach that they never can own will only drive young people further and further from the industry.
Put it this way I will scream blue murder at Shanghai Pengxin buying farms but if I saw Yao Ming's name appear as a prospective buyer I would go out of my way to see that he could be here, escept that he is needed elsewhere at the moment.
I will leave you to google his name and what he is doing these days for you to understand where that comes from, if you do not already know.
The likes of Cameron etc can have a similar effect as a corporation too, you know, with their access to so much money
Ditto Tim.
From your privileged position Anders you "tell" us to be careful "or else". How arrogant
I want my kids to be able to buy land here and have the decent sort of life my parents had. If that means fighting loud and long to restrict foreign ownership, then so be it. With what is happening in much of the world what we have here is valuable beyond words, beyond imagination really. How to try and save that for our kiwi children is forefront in my mind.
I wonder if Anders thinks he is more valuable than what he is. You hold yourself up to be a pillar of the community, which you probably are, but I look down the road, and instead of kiwi ownership I see a huge block of land that is owned by chinese. Farmed by nzers, who will never be given the chance to sharemilk there, or get ahead in the traditional way. They will be just workers, and all of nz is the poorer for that. I should think that that should concern Anders if he is truly wanting to be a real nzer.
I have just reread Anders letter and got lost in thought on his "biggest of big moves". He seems to think that some chat on talkback would have put him off.
Can I just say that if it wasnt for our brave ancestors who came across all the oceans, from as far as England, Ireland, Scotland, Pacific Islands, Europe, Asia etc in munky boats to an uncivilised land with warring natives, NZ wouldnt be NZ. Anders plane ride and touchy talkback characters just dont rate. If thats all it would take to put you off Anders, well thank god my two nanas and two grandads were made of sterner stuff.
I think you miss Anders point Belle. Anders and his ilk are a different type of immigrant to what your grandparents (and mine for that matter) were. They aren't buying a farm that a young kiwi would be looking at as a first farm. Most of the comments I have read on various sites relating to foreign ownership is that kiwis don't want foreigners buying up farmland, full stop. Very few comments actually clarify that the commentator has a different view if the foreigner comes to live here.
Today, unlike when our grandparents came, in order for a farming immigrant to move here they must first have OIO approval to buy land.
Today, unlike when my grandparents came, immigrants need a visa in order to live in NZ.
Today Labour are saying "no foreign land sales unless there is an overriding economic reason why". Under that scenario it will be virtually impossible for intending farming immigrants to come to NZ. If that policy was in when your grandparents came and they were buying an existing farm, then you would probably now be Irish, Scottish or whatever, not kiwi. At no time has Labour differentiated between foreign buyers buying to immigrate and buyers like Robert 'Mutt' Lange.
I dont doubt I could have a chip on my shoulder Cas Ob. As a kid I lost 3 farms. Lets see Portland Cement used the public works act to take the first, parents sold the second when I was 8, and we ended up in the middle of wgton in winter. They (bless their hearts) secured another in the wairarapa and had sharemilkers on it. I became a city slicker for a while, just as I was getting used to it, they dragged me off to the farm at age 14 kicking and screaming, when the sharemilker got lepto. Then at the age of 16 they crushed me again and sold it.
Somehow or other we managed to get our own bit of dirt in the 90s. Making the most of the remains of the distress caused by labour in 84. Nearly lost our block in the mid 90s when the bottom fell out of the beef market. Now pretty much mortgage free. I learnt from Ma and Pa how valuable our farmland is, by the loss of it. I feel for those that cant get their own place, be it farm or house. And I dont go crosseyed the moment those who are moneyed speak.
Once they come to live here they are no longer foreigners, capisce? It's not us that gets that one mixed up, you know.
The whole question of how many immigrants we allow in and what is considered an optimum population, given that the planet needs us to address our over-population of it, is a whole another question for another article altogether
Anders article only refers to immigration as it relates to farming, raegun. In the case of farming immigrants they don't come here unless they have a farm to go to, so in order for them to be able to do that they first need OIO to approve the deal. Even if they have lived here for a year working on NZ farms they are considered foreign buyers under legislation. So you are wrong in your assumption that because they live here they are no longer foreigners.
Just because you live in NZ it doesn't make you a New Zealander under law. Hence the need to very carefully word policy. Take the below as an example a broad brush approach to policy. Why doesn't Cunliffe just come out and say - You have to be a New Zealand citizen to buy land in NZ. My grandparents had to become citizens before they could buy land, as did my in laws. It was the criteria of the time.
David Cunliffe has stated '"no foreign land sales unless there is an overriding economic reason why". "New Zealand land is for New Zealand people. Once we lose the ownership of our land we lose the ability to manage the downstream businesses and profits.
"Of course if people want to come here and invest in a new plant and a new factory and if it's in New Zealand's interests great and they can always form partnerships or lease land, but I don't believe we should sell-off our underlying farmland because once we do that we become tenants in our own country and that's not right."http://m.tvnz.co.nz/news/politics/6046694
The last statement shows how much he doesn't understand of agriculture. New Zealanders are more likely to become tenant type farmers if they are beholden to only being able to sell to foreign owned processing companies. The meat industry is a good example of what happens when there are multiple processors who can set prices to farmers for whatever they like and farmers as price takers, have little or no option but to take their prices. All these processors then compete on the world stage, against each other in the same markets all using NZ product. That is a race to the bottom. Is that was Cunliffe sees as the future for NZ ag?
Jesus wept, you become an NZer you can own the farm, you don't you can't or if you said you would become one within a certain length of time (if that might be a rule we set) and don't, you don't get to keep it, okay?
At some point we DO have to decide just how much we should cut NZers out of the NZ market. Flogging the place off to foreigners is idiotic in my view and my view counts as much as anyone else's.
And wasn't it John Key who suggested we shouldn't become tenants in our own land, and in the end, rightly or wrongly, NZers not foreigners will have the last say, whether you want to argue every last word of it or not
Not sure what Jesus has got to do with it. ;-) But good to see you actually saying what you mean. Takes five years to get citizenship and become a New Zealander under usual circumstances and making that a condition of ownership, especially for family sized farms (say <501ha for dairy) could be a good thing.
Yes iconoclast. Many current kiwi farmers forget how government helped a lot of farmers get on to the land in earlier years. Rehab grants, ballots, Rural Bank, subsidies, etc etc. Even when we bought our first farm we got a supplementary stock loan that so long as we farmed the same land for 10years the loan was then written off. It wasn't a big amount but it all helped. These government support initiatives helped farmers in the way that they helped first home buyers back in the day. None of that is there now - for anyone. However, many parents are now in a position to help their offspring in a way that wasn't there in earlier years. Whether the help is forthcoming or willingly accepted is another story. ;-)
well the government was bootstrapping their dairy supply to towns and developing export product. To do that the government had free/cheap capital taken from Maori to give to people so they could act as gumboot developers. Thats why Sir Henry had the government mission to make sure our financial masters could their part of the pie when the companies were finally ready
Problem with Labours position is that "overrising economic reason" can just be "making a profit" or "highest bidder in a mortgagee sale".
I have no problems with immigrant farmers, But even Anders doesn't seemed to have got his hands dirty (being an investor). I certainly doubt Pengxin major shareholders are going to do 15+ hrs labour in the dirt and mud for 5-10yrs to get their farm.
The investor thing is tricky. Investors cost us money. equity is expensive. at least debt can be repaid, but then NZ savers/funders have to compete with foreign lenders - business have to compete with untaxed offshore corporations who take the profits home with them and can create a wage imbalance in their market segment. But where else is NZ going to get local capital (since RBNZ will kill any decent economic growth)
Excessive foreign investment pushes up prices for everybody else Anders. It's not just an issue in the rural community - foreign investment in residential housing in Auckland is playing a major part in the ridiculous prices in the region.
Can you imagine how "off putting" it is to work 50 hours a week and not be able to afford to buy a home in your own city?
Probably not.
James Cameron - Canada - Huh !!
Scroll back through the OIO approvals for the past 15-18 months
http://www.linz.govt.nz/overseas-investment/decisions
Have a look for James Cameron's T-Base-2
He's very acquisitive - lots of them - can't say it's not in the public domain
Great post Anders and all power to you.
I have consistently posted to the effect that New Zealand land should only be owned by citizens. And further the incentives need to be structured to support the family owned farm. I maintain that point of view.
Accordingly there is only one thing to do. If it hasn't been done already. The brigade should tie you to the back of the engine and cart you off to Masterton for the citizenship ceremony.
They are now New Zealand citizens. ;-
http://www.stuff.co.nz/business/farming/6608334/Farming-excellence-rewa…
I know it's been posted before - but this really is the issue we should be forcused on;
http://www.stuff.co.nz/business/opinion-analysis/10400785/We-need-to-ta…
It's a shame that Fed Farmers aren't pointing this out.
Google search on - Castlepoint custodians iconic Wairarapa station
This article is old - it's been sprayed around the internet in everything that will reproduce it
This is just another spray job I'm afraid
I find it a bit patronising - are they squatting on it? - or are they farming it? - doesn't say
They are farming it. Emily is the one who comes from the farming background. She is the one who has done the shearing course in Tologa Bay etc. So does that mean that in your view because it's the female in business that has the practical farming experience it doesn't count? It is not uncommon in farming businesses for one partner to be more the practical farmer and the other partner do the admin/farming politics side of things. It is also not unusual to find that the female partner is the practical farmer.
That they use more of a business model for governance, I take my hat off to them. If Crafars had done that then maybe they would still be farming their land, instead of the Chinese/Landcorp.
http://www.nbr.co.nz/article/new-york-analyst-farm-station-and-advisory…
thats fine by me...because if Eilmy retires then the farm will pass on. They also derive income from the property, rather than cross-subsidising a losing money hobby or anti-competitive strategic initative which is what can be done if their main income source is from outside the farm
The problem is the finacial part of the economy takes more and more in the form of rent and interest, producers like farmers get less and less as a percentage of income spent on food falls. The finacial part of the economy is stealing of the rest of us.
http://houseofdebt.org/2014/04/29/where-is-the-rent-too-damn-high.html
http://www.fundmasteryblog.com/2009/07/27/food-costs-decline-vs-persona…I agree andrew , i think property markets are being run like a ponzi scheme, where prices are being pushed miles above any value relating to income. But the last thing the banks want is a large number of 40 year old dairy farmers who have paid off alot of debt in the boom, and sitting on their farms for 25 years with not much debt.
It begs the question is investment taking away or adding to the farming industry?
I'm Interested by two of Raegun's utterances: they, to my wizened old eyes, embody exactly what Anders is talking about.
- In fact corporate farming, fullstop, pretty much leaves me cold.
- at what point do we put the skids under it? ('It' being investor-owned farming).
Corporate farming (disclosure, I have an insider's POV here) is on the rise and rise because of two apparently disparate forces.
1 - the need to get more productivity - easy when multiple, mixed-contour, mixed soil type farms are owned. Issues on one (nutrient emission spikes, disease) can be simply addressed by moving stock and effluents to another property in the group. This option simply isn't open to a sole-farm situation. Pooled plant (tractors, irrigators, ponds, treatment facilities, labs, workshops) serve the whole group and generate their own economies of scale. Productivity drives profit, plus corporate farm diversity makes them a much better bet for funders, unlike the single farm where, to mix metaphors, all the eggs are in one basket.
2 - the need to manage to nutrient, emission and regulatory pressures, regimes and limits. This is a full-time activity: ensuring water draw, N and P emission, Elfin Safety etc are all simultaneously kept within their stated bounds, is not something your average SM or single farm can cope with. 'Coping' for small operators generally means operating way under potential, so as to leave plenty of wriggle room. This is by definition, not the best way to run things. Whereas a large corporate can hire a Risk/Compliance Manager whose task it is to ensure the letter of the law is being adhered to. The urban voting majorities keep up a constant upwards ratchet effect on these regulatory limits, so this is regressively exerted most, on those on Struggler Flat farms. There is also, in corporates, the capex and funding ability to reconfigure farms (e.g. from extensive grass to intensive barn-fed) - an ability totally out of the question for Strugglers Flat.
As an aside, check out the ownership of e.g. seeds companies.....don't hear too much aboot This type of 'farming'.....
As for Raegun's second excerpt 'putting the skids under it', I have a gloomy view of the context.
Humans are by their evolved nature very suspicious of 'the other' - a relic of our chimp genes. 'Civilisation' has managed to paste a veneer of tolerance over this genetic payload, but frankly, it's frightening easy to pierce. In essentially cheering for the 'let's defend Our Group against Their Group', the Raeguns of this world risk letting loose the raw forces that we see in their full glory in ISIS, in the endless tribal wars of yore, and in those roving chimp bands that systematically and relentlessly pick off their neighbour's males. For a working example, see Detroit.
And the pity of it is that, once aroused, this is a hard genie to put back in the bottle.
I suspect this is what Anders is glimpsing....
You are welcome to your homogenized, tasteless, colourless corporate world, what you have said could used another "o" and become co-operative farming.
The corporate world which pushes margins down and down relies on high turnover for its return, which in turn relies on an ever growing population and that is something the world MUST address, pronto. You can bet your botom dollar the corporate world will be wanting none of that
We live in a society not a corporation
Am I to take it that you would be perfectly happy to see every square kilometre of farmland owned by foreign corporations, then? To me that looks as controlling of a country's population as any totalitarian government
As someone said the other day, I would rather slide down a razor blade wearing a helmet full of hornets than surrender to that world, thanks
Let's agree to differ re 'corporate' versus individually owned farms. I'd just make two points.
- 'Corporate' does NOT necessarily mean 'Foreign owners'. It means company structure, and a particular operating configuration at that: multiple farms held. Myfarms, etc.
- The core reason for 'corporate' is exactly the reason that companies arose in the first place (e.g. the VOC in the 16th century): the required scale of the structure needed to cope with the challenges (then, the massive risk of expensive voyages to essentially unknown parts for highly uncertain outcomes; now, the need to operate profitably - without relying on CG as the retirement fund as is the case with snall enterprises - within an ever-more-tightly defined set of constraints) is far beyond the ability of a sole trader to organise and sustain.
I note, with a wry grin, that you have not addressed my second rejoinder: that in polarising and over-simplifying the debate to, as I read it , 'Citoyen Good, Furrener Bad', you are actively deepening a chasm between two easily identifiable groups, and lessening the chance of a political middle path. This is IMHO not a useful social direction.
The sad fact is that NZ is too small to have any sort of capital market depth, thus we rely on offshore credit and investment for a large part of our requirements - at a given level of comfort.
To do without (the 'siege economy' view) is to condemn a large part of the population to a much, much lower standard of living - 'sustainable' always has to be accompanied by the statement 'at x level of comfort'.
I rather suspect that's exactly your wish (i.e. capital self-sufficiency plus a pronounced drop in standard of living). Say it ain't so, but then you have to say how that need for external capital is to be met....
We're all ears.
Okay, waymad - so, in defence of your "siege economy" - care to comment on whether we should accept this;
http://www.nakedcapitalism.com/2014/08/new-zealand-prime-minister-john-…
and this;
http://www.stuff.co.nz/business/opinion-analysis/10400785/We-need-to-ta…
I'm all ears.
Not playing on #1, Kate.
#2 is about tax, and Chalkie's examples are from natural monopolies - utility companies. Not quite the same as farming. 14,000 dairy farmers in NZ....rather far from a monopoly....
And I again note, wryly, that I regard a 'siege economy' as something to be avoided: you have only to read Adam Smith, and, more lately, Steven Pinker (Better Angels), to understand that reciprocity engenders trust, lowers/defuses the chasm that otherwise our monkey heritage inserts between Us and Them, and (Pinker continues) expands the circle of empathy in general. Good outcomes.
I still don't see any cogent argument from any of y'all to refute my contention that fanning the flames of an Us vs Them mentality in our already fractious polity, given our situation and our hopes for the future, is a Bad Thang.
waymad, you said: Chalkie's examples are from natural monopolies - utility companies. Not quite the same as farming.
I take it you didn't read the full article? Here let me help:
The issue is the same whether the assets are companies or farmland. The would-be buyer of Lochinver Station near Taupo has been named as Pure 100 Farm, described by the Overseas Investment Office as "a wholly owned subsidiary of Shanghai Pengxin Group".
It may be, but its immediate parent is Milk New Zealand Holding, owner of the former Crafar and Synlait farms in Waikato and Canterbury. Milk New Zealand Holding is wholly owned not by Shanghai Pengxin, but by Milk New Zealand Investment, a company registered in the British Virgin Islands. The ownership was disclosed to the Companies Office on August 13.
Chalkie reckons owning New Zealand farms through a Caribbean tax haven may have tax advantages - or is that xenophobic?
And yes, it's all about tax - tax that isn't paid locally - thus robbing NZ the opportunity to sustain both our sovereignty and our lifestyle.
Tiresome isn't it Kate
While I've understood the implications for quite some time, (glad that you and raegun do) (disappointed chalkie took so long) it appears some don't, and will eloquently discourse at length in other directions for the purpose of mis-direction and obfuscation
Chalkie has been diligently digging up odious examples for some time - here is an earlier effort.
Happy to disagree so long as my view wins out in the end.
And of sustainability I take you advocate things unsustainable, now I am really scratching my head and can only deduce that it's not going to bother you a few decades down the track.
As for the "furrener"thing I have written many many times my view on it all, I will just add that I cannot see any point whatsoever in a country where the people who are born and bred in it are unable to afford to have a stake in it.
You can argue it till the cows come home (pun intended) but we are not just a blasted business.
Not sure what you mean by a reduced standard of living but I don't consider a lot of what we think we need contributes in any way shape or form to an enhanced standard of living. Life is about what you can do not what you can have
The core reason for 'corporate' is exactly the reason that companies arose in the first place (e.g. the VOC in the 16th century): the required scale of the structure needed to cope with the challenges (then, the massive risk of expensive voyages to essentially unknown parts for highly uncertain outcomes; now, the need to operate profitably - without relying on CG as the retirement fund as is the case with snall enterprises - within an ever-more-tightly defined set of constraints) is far beyond the ability of a sole trader to organise and sustain.
I don't think so - you need to get out more and trade a little;
Apple’s $18 billion repurchase in the first quarter and the $16 billion it spent between April and June of 2013 are the two biggest buybacks by any company in data compiled by S&P starting in 1998. They came as the stock advanced as much as 77 percent over 15 months after falling to a 16-month low in April 2013.
The return followed the weakest period for Apple shares in the last decade. After vaulting almost 900 percent from the end of 2005 through September 2012 and becoming the world’s largest company by market value, Apple plunged 44 percent in seven months amid concern about new products and competition. Read more
If #1 was true, then why has NZ dairy farming done so well against competition with richer markets, better technology, cheaper finance and government subsidisation?
How much personal experience have you got in running and analysing farms? (yeah, I think I'm qualified enough to ask that question...)
Cowboy, I'm an outsider looking in, in terms of direct farming experience. Not my thang. But sorta from the infrastructure side, definitely inside the tent. Analysis, most definitely. But no skin in the game, which is 'xactly how I like it.
#1 is a recent trend, not a total production configuration of the industry Of 14K dairy producers, I'd hazard a SWAG at 100 corporates (say with >10 farms each). I may well be hopelessly out here. So average production stats per region, nation, market segment or whatever slice you like to take through the data, has been mostly based on the small-producer aggregates, and that's the basis for success so far.
My larger point is of course that the trend to corporate, small though it may be, is certainly exacerbated by the urban din of sound-bites, slogans, and half-assed theories about how farming can be made 100% this or that AND still maintain their contribution to export income. This series of non-sequiturs has been commented upon by Willie Leferink, just recently.
Now don't get me wrong, While I see corporate trends, I too am uncomfortable by the increasing lock-out of the youngsters: it's exactly analogous to the housing dilemma. I just am extremely wary of the shrill 'Blud unt Boden' tone I hear coming through. No good comes of fomenting That sort of division.
But to take a leaf from the Housing issue, one thing that's certain to drive the whole thing further in the wrong direction, is to engineer a whole series of additional cost layers into the deal. Because, as housing DIY'ers discover, ya cannae beat City Hall, and the costs go through the roof.....and the poor old FHB (or for dairy, SM) sees the goal posts steadily receding.
The thing with farming is there will all ways be inconsistent returns as there are so many different factors that make up the market price. Markets are very complex and constantly changing. (Weather, has in itself, the biggest effect on price). Corporate farms as you have said, have the advantage having blocks of land with different soil types and location, but in my opinion pushing production only works to a degree, the pie is only so big, so overstaffing, over capitalising only creates costs that would'nt exist in a lower production, lower cost operation. i think a farming operation needs the flexibility to be able to cut production and costs at times when the price has dropped.
I guess what I'm saying above is that i don't think i would invest in a corporate farm, because there is no incentive for corporations to cut costs. Corporations create bureacracy. You can't just say because you are a corporate you can afford to house your cows in a barn, I think the price of milk will allways determine if it is economic to do that.
yes, that consdumer sensitivity to the raw milk price is the biggest factor.
That's why the National Party Finance Minister is an utter and complete incompetent.
On record as saying low returns will slow corporate farming.
Who knows better him, or the Pengxin Chinese Billionaire...who owns a bunch of supermarkets. China mega-farms are paying up to double our gateprice for raw milk...
So if there is a smart businessman who owns the downstream supermarkets, he can source *his* raw milk here, top quality, at half of what his Chinese competitors are paying locally. Gee Mr Finance Minister that's really got to be bad for the corporation (and never any incentive to improve the NZ status quo...)
Anders : I'm sorry that you feel that Kiwis are becoming a bunch of sour faced xenophobes ....
... but you are right , to paraphrase funny Cunny , sometimes I'm ashamed to be born a New Zealander ...
There was a time when we were reknowned for our sense of fair play , our good humour , our ability to assimilate new cultures and fresh ideas ...
... until CER , then we became " Australianified " .... grumpy , bad tempered , put up the barriers , repel all boarders , protectionist , nationalistic dunder heads ...
Sorry Anders , you are correct ... as you can see in this thread , there's alot of the " crappy Kiwi " on display ...
Exactly what is xenophobic about not wanting your country's land to be owned and made money off from another remote country, I do not believe that is the definition of that word, whatsoever. You lot use it to try and shame those of us who have our own country's best interests at heart.
I have yet to hear a good alternative for the future of NZ under the sale to foreign owners plan. several "we are entitled to get rich now" beads and blankets tales, but yet to hear anything positive for the pro-sales side.
And when asking the question, I get accused of xenophobia and racism. That's not good.
There was a time when we were reknowned for our sense of fair play , our good humour , our ability to assimilate new cultures and fresh ideas ...
.........
There was a time when the land was locked up to a great degree in large holdings. Along came the Liberal Government who used taxation to break up the great estates to put the "small man on the land".
I can imagine now the big men would be employing PR companies to extoll the benefits of themselves?
I tend to view modern corporate farming as a repeat of the 19th century estates. The only reason New Zealand had family owned farms through the 20th century is that the government took the view that it was better for the country to have the land worked by many people as owners not employees, and deliberately tilted the incentives against large scale. I think that worked pretty well for 100 years.
Exactly dh. To remember our history always helps. NZ agriculture started as estates, or corporates if you like. Awful. We changed that to the owner operator - family owned system.
The powerful social and economic benefits of that for more than a century have made NZ.
(sorry about the length but this needs a bit of laying out...and interest,co.nz don't do powerpoints (yet))
The problem is not "of protectying smaller farms being swallowed up" it's about artifical incentitives that are being forced on to farm businesses designed to make them labour capital intensive in order that they have to more to mass production/productivity to spread these artifical compliance costs over a larger volume of sales. But going back to Adam Smith, the nail maker nows needs to sell (ie find a market for) 500 nails a day in order to make a living with his specialisation.
Having assembly line production can produce a smaller cost per unit but that smaller cost saving comes from somewhere. And since the rates, insurance, feed, stock, interest are all standard pro-rata there's only one thing that moves...the wage income. However it can be hidden because the individual wages don't go down. It's not until you take an area of 20km sq, look at how many incomes are supported, then compare against corporate farms that you can see where the savings are being made.
It gets hidden in the philosophy/fallacy of high-productivity. When the system/product supports such production then it makes sense, but when it's contrived, as it is with farming, it is a false saving. I know of a group of farms in SI, they make one farm a winter milk farm, and the others support units. In spring they ship the calving animals back to the outside farms, to be run as seasonal units. Sound efficient? but it's 9000 cows to support around 20-25 people. cost effective indeed... until you open the can of worms and start talking to the people working there.
Like certain retailers (and other big bosses) it's a nice lifestyle if you're the fat pigeon at the top, with the clean air and a say in the running of things, and time to go to shows and dinners and fancy holidays and overpaid personal menial staff....but talk to those at the bottom of the heap, look at the attrition, look at the resource consumption. Those *in* the system speak of "a living hell". They prefer my lifestyle, a simple 80-100 hrs during spring and 20-50hrs over summer and autumn, with dependable income. they don't like being cogs ground up in the machine in which they have no say and no creative input.
And the big corporates get to throw their weight around.
An excellent example just crossed my desk yesterday.
LIC, of which customers must become shareholders in the co-op, have declared that "Queries MUST be resolved in 90 days". They are party to NZ Herd Testing Standard (NZS8100) that says _every_ milking animal that is recorded in their records MUST be tested at herd test time.
...now why is this weird?
Last time *I* checked *I* was the customer. I select what animals *I* want tested, I decide what tests I want, and within the realms of technical and financial agreement that's what is done and what I pay for.
Yet now LIC are telling me how I have to choose, and what I'm going to get.
and they're offering to send out their staff (at my cost) to make me compliant on their database. Not just legal NAIT stuff, but other general animal records (records which I pay them to keep!)
They are telling me that I need to record every animal at birth and enter the records immediately.
so who is the customer here?
who is the employee?
fortunately with some computing background, my records are impeccable. But this takes time as incoming animals, and worse the LIC computer system, is not always accurate (eg a calving cow doesn't go from pregnant to not-pregnant, it just stops being pregnant, which isn't the same as "not pregnant" for the computer generated reports)
But enough supporting detail. Who is the customer? We have spend decades and millions building this system up to support the shareholders and customers, and now they think they can charge us and call the shots? I'm tempted to drop the herd testing although I can see third parties making such monitoring compulsory "for animal health and consumer safety" (I only use it for my customers who prefer the continuous records).
But as the decades and money has been spent in building our supporting co-ops, there is a lack of competition I can use instead.
And why should a customer-shareholder be expected to be told what and how they will utilise the services? It is just a push to corporatisation - keeping records it's a task different from practical farm work and animal handling - so that means in many cases specialisation and/or extra labour must be hired. Not viable in small herds, so smaller herd must either fail at compliance and face possible exclusion, or sell to a larger corporate.
Last time I checked, If I go to Maccers as a customer they don't tell me that I can only get a combo. I go buy a playstation, the salespeople don't insist on a minimum of 10 programs before they'll sell. If I hire a builder.... well strangely enough they have all sorts of compliances and monitoring which threaten their business, livelihood and inflate their costs...all pushed on them by government and their big industry corporates........
If you like me, are anti-corporate everything, you would not go to Macca's,you'd seek out the local small takeaways.
What you describe is pretty much what happened to the fishing industry as it became harder and harder for the small operator, unable to own quota, unable to afford the hideous lease costs, saddled with the cost of MAF inspections, till now that independent small fisherman is just a deckie or a knifehand on a factory ship.
What stuns me is that there are people who actually think this is a good thing
Living hell, I reckon
... another reason not to frequent Maccas is that we each have a finite number of meals infront of us , so why waste a single moment of your tastebuds limited time on Macca's crud , when there's wonderful food experiences to be found in every nook and cranny of this splendid land , girt-by-sea salt & pepper ...
Off for a Gummy feast of Turkish kebabs ... I can't wait ... but hope the waiter can ...
I don't mind corporates as they can be useful, what I object to is the deliberaet and artifical adding of cost, compliance and lack of choice to force the corporate model where it doesn't fit.
In my example of LIC, if it was needs of (farmer)customers, or of consumers willing to pay for premium services then that's proper development. But it's not, it's top down push of revenue seeking and market manipulation... and that is what creates the inequality that is causing so much trouble. with the corporation push, the cost recovery rises, but income does not. small efficient providers go out of business, corporate scale comes into play. When end up with 5 well paid employees in place of 10 owner-operators or 10 average paid employees. Leakage rises as the corporate model is less efficent, but the low cost of volume hides the lower efficiency.
All good if this is natural development, because those 10 owner-operators will go elsewhere. But in a forced system there is no decent return or investment for them.
Our 5 well paid employees do well with their income, and they start wealthy lifestyle expectations, including paying more for food (ie being picky, demanding premium services)...but there's only 5 at the expense of everyone else who hasn't benefitted from the corporatisation. As like raegun has mentioned those previous employment slots of owner-operator are now low value position/near minimum wage. while "living wage" is set by the rules of corporates and wealthy expectations of the few remaining well-paid.
tim12: this is 'xactly the sort of compliance issue that loads extra cost layers in, and fuels the drive to corporates. See also my note to Cowboy, above.
Councils (I know about them from an insiders' history of 20 years in small rural counties, and them were the Good Old Days at that) don't often do 'relationship management' well or at all.
To them, y'all are Cash Cows to be Milked, Sheep to be Fleeced, and Peasants to be Educated.
Not Customers....
For y'all to see - the underground foreign influence
Appearing in the news the day following Anders Crowfoot's Political Press Release
Money Laundering - assets freeze - proceeds of crime - Bill Yan
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10842947
Money laundering - tax fraud - newly developed land - sold straight overseas - GST free
http://www.stuff.co.nz/national/politics/10418387/Winston-Peters-points-at-laundering-scheme
Naked Capitalism - Kathy Odgers - Cactus Cate - Money Laundering out of Hong Kong
new-zealand-prime-minister-john-key-the-whale-oil-blog-and-international-organized-crime
Like to know how Anders rationalises all that away
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