Chinese bid for NZ dairy spurs call for strategy

The bid by a Chinese-owned Hong Kong-listed company to invest $NZ1.5 billion in New Zealand's dairy industry has triggered a call by farmers for the Government to put together a coherent strategy on food production and investment in that sector.

"New Zealand has not got a strategy for food production and agriculture," Federated Farmers' dairy section chairman Lachlan McKenzie said.

"We haven't got a clear vision of what we're trying to achieve ... the Government needs to start a serious discussion on a food production policy for New Zealand.

"Maybe time has come for us to look at a Ministry of Food Production."

Natural Dairy NZ Holdings Ltd - which changed its name from China Jin Hui Mining Corp in December - yesterday told the Hong Kong Stock Exchange that on February 11 it signed a deal with two parties to acquire assets including farms, livestock and milkpowder production plants, with the deal to be settled partly in cash and partly through an issue of convertible bonds.

The company is registered in the Cayman Islands, and its share price jumped nearly sixfold in the year to February 11, and trading in the stock has been suspended since then.

The proposed purchase is reported to include 30 farms, including the Crafar family's 22 dairy farms valued at $206.9 million when four Reporoa-based companies were put into receivership last October. Other farms involved have been owned by Allan Crafar's son, Robert.

Receiver Michael Stiassny, of KordaMentha, said today talks to sell Crafar assets were continuing.

Green Party co-leader Russel Norman said the Natural Dairy announcement showed the nation's overseas investment laws were weak, and the Overseas Investment Office had in the past rubber-stamped applications to buy farmland.

"We actually need much stronger rules around overseas ownership of productive New Zealand assets, otherwise we could lose a lot of our productive land to foreign governments and foreign companies," he said. It was important New Zealand held on to what it had.

"The Chinese government and other governments are very concerned about food security, and so there is an increasing problem of foreign governments buying productive land in other countries."

Mr McKenzie said some of the difference between the $200m value of the Crafar farms and the total proposed deal could be accounted for if the company had contracted to have a new $500m milkpowder plant built -- but that still left a lot of money to be spent on other farms and livestock.

"We've got a free trade agreement with China, and this shows that the gate swing both ways," he said.

"The Chinese want a secure food supply, and they're coming into New Zealand to do that, by the look of it.

"The ball is very much in the Government's court -- a purchase of New Zealand farms will be tested in the Overseas Investment Office.

"This would be the largest investment since Canadians tried to buy the Auckland Airport -- and they were stymied by the previous government".

The 2008 block on the sale of shares in Auckland International Airport to Canada's state pension fund provoked a debate over what was a "strategic asset" and what was "sensitive", even though it also involved assets which could not be physically removed from the country.




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