Chinese company Shanghai Pengxin has been granted consent to buy the Crafar farms.
Land Information Minister Maurice Williamson and Associate Minister of Finance Jonathan Coleman have accepted the recommendation of the Overseas Investment Office (OIO) to grant consent to Milk New Zealand Holding, a subsidiary of Shanghai Pengxin Group, to acquire the 16 farms. NZ government-owned Landcorp will manage the farms.
Mr Williamson said it was clear the bid met the relevant sections of the Overseas Investment Act.
The approval follows the receiver KordaMentha’s acceptance in late 2010 of Milk New Zealand Holding's bid for the farms.
Conditions of the sale include investing more than $14m into the farms, making them more economically and environmentally sustainable. The Nga Herenga and the Te Ruaki pa sites must also to be protected, while walking access to the Pureora Forest Park and Te Rere falls is to be improved. An on-farm training facility for dairy farm workers will also be established.
The bid may have been approved but it is unlikely to be the end of the matter.
Yesterday in the Wellington High Court, David Cooper, a lawyer representing rival bidder Sir Michael Fay's consortium - which put in a much lower offer for the farms -, indicated that should the sale to Shanghai Penguin be approved, legal action would be taken against Milk New Zealand Holding to stop the sale.
The ministers refused to comment on the proposed legal action today, saying the matter was before the court.
Approval of the sale has been condemned by a member of Sir Michael's group, who said the decision was not only wrong in law but it set up open season on New Zealand land for foreign buyers.
Hardie Peni of Tiroa E and Te Hape B Trusts, said his people were “dismayed but not deterred” by the decision although he did not address the issue that the bid he is involved in is much lower than the successful one.
Prime Minister John Key also came under attack from Mr Peni.
“Last November, during the election campaign, Prime Minister John Key was only concerned about public opinion – but he now says public opinion does not count in this decision.
“The result is that all New Zealanders, and in particular Kiwi farmers, have been shafted.”
Mr Peni was concerned that Shanghai Pengxin had no background in farming.
Sir Michael said the group would seek a judicial review of the ministers’ decision.
“Back in September 2009, Finance Minister Bill English was justifiably boasting about law changes he had achieved to allow ministers to veto OIO recommendations for large-scale foreign buyouts of New Zealand farmland.
“That two ministers have failed to apply Mr English’s laws properly makes a mockery of his boasts.”
See a copy of the OIO’s recommendation http://www.linz.govt.nz/sites/default/files/docs/overseas-investment/oio...
See a copy of the OIO's decision summary http://www.linz.govt.nz/sites/default/files/docs/overseas-investment/dec...
Comments and questions86
About time it was approved!
Not sure what the delay and big fuss was.
It will be interesting if a surplus is achieved and the crafars end up with some funds ( Yeah right as guaranteed the receivers have sucked up any spare funds )
Westpac will probably get its money back....
mr fay now knows what it's like to be shafted good and proper just like he did to every kiwi with the bnz and nz rail amongst others.
Enjoy the feeling.
Hardly think shafted mate, the Fay group was always up against it and them's the breaks when you play in that league my friend. Gutless decision by the government and unfortunately seals the fate of the land ownership and profits for eternity.
So John Key works for the internationalists, nothing surer now. Smeels a lot like a stitch up from overseas, like Dotcom and the Hobbit. At least, it is plain now for anybody who wishes to see it.
Stiassney has a lot to answer for in this travesty as well. Why did he not break it up and sell it to the sons of New Zealand farmers?
Aussie beckons for another generation of kiwis John boy, explain that to your kids, or will they be heading off to New York bank jobs too?
Good to see the farms will now be professionally managed by a reputable Kiwi entity, this should put a permanant stop the animal rights issues we saw when the Crafar family was in charge. Also good to have an NZ manager so some of the profits stay here. Also good for other farmers who want to sell, knowing they won't have to give there sweet labour away more cheaply to a kiwi firm.
'Milk New Zealand' ... how appropriate!!
Once again a toothless OIO fails to prevent a large sale of one of New Zealands key assets (its land) going into foreign ownership. I back Mr Fay and I hope he can prevent a sale achieving what the government could not.
The land isn't going anywhere. The milk is still being exported (just like it is now). They are employing New Zealanders. They will invest more in to the farms (and far more responsibly than the Crafars ever did). We now have public access (which the Govt could not get if sold to kiwis). Still, don't let the facts get in the way - lets ban all foreign investment in farms...but why stop there? Ban all foreign investment period. No no no, lets go a step further and let the Govt buy everything through Landcorp. Welcome to Cuba of the South Pacific if the looney left ever get their way
David Shearer’s quoted in the Herald as saying:
"Landcorp, the Kiwi SOE which itself made a bid to buy the farms, will now be paying a Chinese Government-backed company a touted $18 million a year to rent and manage the farms for it.
Talk about politics: Landcorp is paying a lease on the land. Landcorp is a well run SOE who would not be paying the reputed $18m if they could not make a dollar out of it. This is a form of a sharemilking agreement. Hundreds of these exist around NZ and form a massive part of the New Zealand dairy economy
Mr Shearer reportedly goes on: "This latest decision will be a massive kick in the guts for the local group of iwi and farmers who also put in a bid”. What kick in the gutz, the were offering far less that the successful bid. So what are you saying Mr Shearer if I want to sell my house to a Chinese person and they are willing to pay $800K, but a New Zealander only wants to pay $600K then I should sell to them? Mr Shearer you have just shown how xenophobic and out of touch you are, and another reason to say phew thank goodness Labours not in charge. Incidentally the OIO was working to the laws of 2005, was labour not in charge then? And Michael Fay, sit down.
All Mr Key can say against the argument of selling to foreign ownership is that Labour did it to the extent of 650,000 hectares. What I have to say is stop living in the past and look to the future. Now is the time to draw a line in the sand and say no more.
If we keep selling massive chunks of land overseas we will never get it back as local New Zealanders do not have the funds to compete with the overseas dollar. It disgusts me to think that we sell out to the highest bidder for short term gain rather than think of the long term sustainability of New Zealand. This deal was all about the receiver trying to get top dollar and the OIO stepping aside to keep good relations with the Chinese. Not one New Zealander will be better off from this deal as all the money will go to the receivers to pay back the secured creditors.
Good decision! Realistic and commercially appropriate. If born again patriot Fay and his iwi mates wanted it that much they only had to stump up the additional $30m and it would been a whole different conversation. The Receivers only responsibility was to the secured chargeholder, not the public of NZ. Accordingly, and as in any recovery, they were charged with the responsibility of obtaining the best possible price and they did. Politics and misguided nationalist opinions had no place in the process. Well done KM, and well done the Govt.
Right across the globe the Chinese are buying strategic resource, be it oil wells in Sudan, copper mines in Zambia or productive land in New Zealand. They have worked out that the history of the next 20 years is going to be all about access to resources in a resource depleting world. You can put away your day dreams about never ending growth, its all about resources - and the Chinese will find the means and the methods to defend what they have bought. In such circumstances any government which wilfully allows the sale of such assets is either paralysingly ignorant of what is happening or simply traitorous. You decide,
I cannot believe that we sell our land to foreign ownership yet there is no way the Chinese would allow New Zealanders to buy land in the People's Republic of China. The best we could hope for in terms of reciprocity is a long term lease. How come we could not do the same. Short-sightedness by the government.
What's the fuss? The Crayfar's farms have long been owned by offshore owners, the Australian bank Westpac. So an Australian owner will now become a Chinese owner.
Mr Shearer to be consistent must advocate restrictions on offshore money funding NZ assets which is patently impossible and absurd given NZ"s cronic lack of savings.
Great comment crowd pleaser!!
Chinese warships parked at bottom of Queen St.
How would Westpac like that?
I'm a little surprised Sir Michael's bid was unsuccessful - considering all the experience he gained back in the 80's building those wonderful 'chinese walls'....
The big question now. Can we go and buy land in China? Is the playing field level?
If David Shearer becomes Prime Minister I would expect him to kick out all Australian banks. Most farmland in NZ is owned by Australian banks. Until you pay off mortages the house you live in and the farm you work on is not yours! Does not Mr Shearer know this basic rule?
We hand over our land without a shot being fired.
You can. But I suspect you can afford it because you would need to buy the same piece of land again in 30-70 years time.
That would make it a lease.
Global food shortages next 50 years- guaranteed !!
What productive base is nz going to have to pay for all the services required for an aging population.
Where is the strategic plan from the government !
The upside in the deal is the leading dairying experts (Pengxin) are to help Landcorp develop their business in China.
The NZTE China Beachhead Board resigned last year (?) because they thought NZ had missed the boat in China because of poor government co-ordintation. Here we have a leading Government SOE needing the help of a "passive investor" to develop markets in China.
Recently BNZ economist said other than dairying and wood our exports had grown by 9% in three years to China (around the time of the FTA) yet the Chinese economy has probably grown by 30% in that time so we have gone backwards in real terms.
Focus should not be worrying about what China is doing in NZ but what NZ is not doing in China. The government (MFAT, MED and NZTE) have supposedly developed a China Strategy - what the hell is it? If this is part of the strategy then heaven help us.
Jobs for NZers?
Rubbish!
Under the free trade agreement they will be sending/allowing Chinese Nationals down to run/work on the farms! It is happening in the tourist industry
Wait and see.
What an irresponsible and immature comment.
The land in China is owned by the government. No private citizen or company is able to buy any land there.
Get it?
This is free market polices at work, You cant have one set of rules for one and not for another.
Well, the Chinese have always been playing the long game (and food security is part of that).
What a shame the same cannot be said for NZ's decision makers. More short-term profit silliness, devoid of long-term thinking.
slowly slowly catchee monkey.....
We had previously already sold off over 650,000 hectares to foreign owners e.g. Germans etc. So whats a few more. If you heard Tony Alexander on the Radio yesterday it doesn't sound like it was that big a mistake. according to him at least the Chinese will spend some of their money in NZ building milk powder plants and employing kiwis to run them as opposed to the German etc who have spent sweet F.A. If he is correct and the Chinese follow the example they set in other countries they will invest in other NZ industries and spend more here. Are they any worse than some other nationality?
It's not that the Chinese are bad, it's that they seem to be showing significantly more wisdom than NZers, which is a shame (on our part).
Really? Better wear bulletproof vest when buying Gold Coast property then!
Totally agree with Richard you cant discriminate between which countries buys assets and which dont.
STIASSNY OUT-MANOUVERS FAY.. smart play by the receiver who has clear obligations in realising best value for the assets. That Fay thought his price and PR campaign would change things, let alone influence Key, was simplistic to say the least.
Well if all criteria were met to pass OIO approval then what else could be done?
Selling to the highest bidder is the logical thing to do. would you sell your house for 15% less than the higest offer....I think not! Prehaps the Fay consortium should have increased there offer, but it is a shame to see more NZ land go overseas.
Solution = to make the OIO approval criteria harder to meet and place more retrictions on what, and how much can be forign owned.
STOP BORROWING FROM OVERSEAS - it's that simple, you whinging losers.
Why is that relevant? if the Crafer loans were/are from overseas companys it still plays no part in the sale.... Unless you think NZ Financing agencys would take a 15% loss of profit, your having a laugh. Do you actually understand what this is about?
Understand it only too well, matey.
Billions borrowed by New Zealaders to 'invest' in coastal and resort holiday homes, specially between 2002 to 2007 - all from overseas.
Total waste of money and just a small percentage of that money would have bought the Crafar farms for New Zealanders.
You're wasting time replying to "Dragon". He just has no idea on how things work financially.
Those farms are in NZ and will be still there in the foreseeable future.
Well done Maurice Williamson.
Now let us go forward and sell LandCorp, unless someone can come up with a good reason why the taxpayer should be in farming??
Also, STOP borrowing from overseas to play the pyramid game of buying dairy farms at 2% to 3% return.
Dumb, dumb and just so dumb.
Yes, the Mr Morrison who wanted the farms sold day 1 in receivership.
Another clever kiwi.
Boo, hoo, hoo. sold out to the yellow peril..
What a pack of racists.
Are you trying to to say that wealthy people and business in NZ couldnt afford it?
Or are you saying that landcorp/govt should have brought it?
If that is what you are getting at, they had the farms valued it far, far less than the winning offer.
What person would ever think that paying 50+million over valuation would be an intelegent move when the country has far more important and urgent matters that the money should be spent on.
Differnt for the chinese who have brought it as means to expand there business, have huge financial resources and can easily afford to spend more on this paticular investment.
Its all about smart allocation of funds my friend.
Wealthy NZ investors/companys must also have thought that 210mil was well over valuation or there would have being more of I fight for it..
Smart allocation of funds?
Like borrowing and spending billions on coastal and resort holiday homes, geared up to the hilt?
Like borrowing and spending billions (like the Crafars and Mr Hubbard of South Canterbury Finance) buying up farms at 2% to 3% return?
I feel sorry for New Zealanders - so obsessed with properties, and so ignorant of financial risks.
Just 3% of the $7 billion 'invested' in the finance companies would have bought Crafar farms.
Just the loans by Bridgecorp to build resorts in Fiji (to onsell to .... yes, New Zealanders) would have bought Crafar farms.
Absolutely correct.
The Chinese put a premium on the farms, as a "sweetener" aka a bribe for a foot in NZ door.
It worked and good on 'em.
Can you please list the brands produced by these farms so that I can boycott their purchase.
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