Foreign investors again eye NZ farms

Foreign investors are once again eyeing New Zealand farms and primary processing businesses to secure future food supplies.

Southern Pastures, registered in Auckland, is seeking $500 million from local and offshore investors to initially buy outright, or controlling shares in, farming concerns throughout the southern hemisphere, but with a bias towards New Zealand.

Foreign investors are increasingly seeking to take a stake in New Zealand agriculture to secure food supplies to feed a forecast extra three billion people by 2050, but also to satisfy demand generated by growing affluence and a more westernised diet in Asia.

Last week, it was confirmed a Chinese company sought to buy the dairy farm assets of Crafar Farming and there have been other attempts by overseas-based companies to buy New Zealand farms.

A leading agricultural businessman, who asked not to be named, said Southern Pastures was one of 10 similar business ventures he was aware of.

He said he was approached weekly by overseas investors wanting a piece of New Zealand agriculture.

In a document obtained by the Otago Daily Times, Southern Pastures states that it hoped to take advantage of the indebtedness of some New Zealand farmers, which had depressed land prices, and to benefit from forecast world population growth, food and water shortages, a loss of agricultural land and the increasing might of Asia.

"Currently, farm prices are stressed due to over-leveraged farm owners and reduced product prices.

"This provides an ideal counter-cyclical investment entry opportunity for Southern Pastures," the document says.

Southern Pastures is a wholly-owned subsidiary of another Auckland-based company, Foundation Capital Ltd, which has as its majority shareholder, Foundation Securities (NZ) Ltd.

The document lists the directors of Foundation Securities as chairman David Wolfenden, a former managing director of Countrywide Bank and a director of AMI Insurance and Organic Dairy Ltd; managing director Prem Singh Maan, who has an extensive banking background; Chris Holmes, who has worked in financial services; and Phillip Wright, who owns a private investment and management company working in the private equity and venture capital industries.

The company will use state-owned-enterprise Landcorp to manage its farms, and the Public Trust to be its custodian.

An unnamed advisory board, including a former prime minister, the chief executive of New Zealand's largest dairy co-operative prior to the formation of Fonterra and a leading securities law specialist solicitor, will assist with any purchase, divestment and overall business strategy decisions.

Access to water was identified as a key consideration for any farm purchases, but farming systems would be free range and grass-based.

The investment was promoted as an opportunity for investors outside New Zealand who, because of "restrictive legislation", have been unable to gain exposure to the sector.

The document does not discuss the likelihood of Overseas Investment Office consideration, but the company has international aspirations, including selling New Zealand farm technology.

Products from New Zealand farms could be supplied directly to countries or entities, or "assist such partners in applying Southern Pastures management and pastoral farming systems to their home markets".

As well as securing food supplies, the document said investing in New Zealand was ideal because it was "water-rich" with a benign climate and politically stable, and had an agricultural sector with a green reputation, which was free of tariffs and subsidies.