Risk good reason for sale

April 10, 2013

Opponents of the government’s programme for the partial sale of a few state owned assets are seizing on the risks to investors.

They purport to be worried that people who buy shares in Mighty River Power might lose money.

Their concern is no more than crocodile tears because they also complain that only the wealthy will be able to afford the shares.

But in raising fears of potential losses, they appear not to understand that if no shares are sold the government carries all that risk.

The risk of investment in non-core assets is not a reason for continued state ownership. It’s a very good reason the state should divest itself of them.

The government ought to ensure every cent of public money is put to best use.

There is potential gain in any business but there is also a potential for loss and that’s not a risk the state should be taking when there are far better uses for its very scarce resources.

While we’re on the subject of risk, Landcorp has told Shanghai Pengxin, which took over the former Crafar farms from receivers, that its investment will make a loss this year.

Chief executive Chris Kelly said the drought has had significant affect on revenue. Extra capital expenditure by Shanghai Pengxin has also been required.

People opposing land sales to foreigners are concerned about profits going overseas. At least this year, the owners will be losing money.

The risk the state takes in owning non-core assets is also illustrated by Landcorp’s half-year report:

At the time this report went to the printer, an operating result of around$6 million to $8 million for the full year 2012/13 was expected. Since then,Landcorp has experienced the worst widespread drought in many years. As a result, it is unlikely that the Company will report an operating profit for the year and consequently it is not likely to pay a full year dividend.
Around $1.6 billion in assets and no dividend. There are far better, and less risky, uses for public money than that.

 


Swedes to buy Hart farms

February 1, 2013

Southern Pastures Limited Partnership, a group of Swedish investors, have Overseas Investment Office approval to buy eight Waikato dairy farms from Graeme Hart.

Swedish investors have government approval to buy eight Waikato dairy farms owned by NBR Rich Lister Graeme Hart.

The farms were part of 29 former Carter Holt Harvey dairy farms near Tokoroa – supporting almost 20,000 dairy cows over 30,000ha, on land converted from forest – put up for sale in 2010.

They were marketed for $225 million, with the cheapest at $5.1 million, suggesting the Swedish deal is likely to be worth tens of millions of dollars.

Ex-All Black captain Graham Mourie will run the farms for the Swedes. . .

The 16 former Crafar farms, the sale of which caused the xenophobes so much angst, covered about 8000ha and carried 16,000 cows.

That sale was believed to have been for about $200 million.

On the face of it, the Hart farms look like a bargain when compared with the Crafar ones but – and I stand to be corrected on this – I think the Crafar farms are on much better land.


Crafar farm sale delay costly

December 5, 2012

PGG Wrightson has finally received repayment of loans over the Crafar Farms of about $25 million now the sale of the properties to China’s Shanghai Pengxin Group has gone through.

The people protesting about the sale for political reasons wouldn’t have considered the businesses which wouldn’t have got their money back until the deal was finalised.

The delay would have been costly for creditors and there are probably some who will still be owed money.


Crafar farms sale finally settled

December 1, 2012

It’s taken far longer than it ought to have, but the sale of the former Crafar farms has finally been settled.

Today, after a long and extensive process, the Receivers from KordaMentha have secured final settlement with Pengxin New Zealand Farm Group Limited for the Crafar Farms.

Pengxin New Zealand Farm Group Limited’s offer was accepted by the Receivers two years ago and has been subject to many hurdles, opposition and challenges.

Brendon Gibson of KordaMentha said “despite a long and challenging process, we are happy to have secured the sale of the Crafar farms at a very pleasing price. Following extensive local and international marketing of the farms as individual units and as a group, Pengxin’s offer was far and above the best received so we are very satisfied to secure final settlement.

“We have operated the properties for three years and the farms will be handed over as a full going concern for Pengxin and Landcorp. The farms we inherited required some hard work and investment during a volatile economic environment, the support of our appointing banks, staff and sharemilkers during these challenging three years has been exceptional. We understand the new owners and operators will continue that work and investment in the farms. . .

While I don’t think the government should be farming that is a political view about best use of public money which doesn’t reflect on Landcorp’s ability to manage farms.

The company makes a poor return on capital.

But the farms it owns and manages are generally well run and the former Crafar farms should do much betteer under Landcorp management.

 


Rural round-up

November 10, 2012

Synlait Farms Takes Out South Island Farmer of the Year title for 2012

Canterbury-based dairy enterprise Synlait Farms clinched the Lincoln University Foundation’s South Island Farmer of the Year competition for 2012 last night (Thursday 8 November 2012) with an entry that judges hailed as a prime example of New Zealand’s leadership role in innovative and entrepreneurial agricultural practice.

Chief Judge Bob Simpson said that all four finalists demonstrated leadership, excellence and innovation.

“Any of the finalists could have won this award tonight,” Simpson said. “But in the finish it was Synlait’s blend of family-based traditional farming practices with the very best of modern corporate innovation and management systems that saw this multi-farm company stand out. Synlait’s approach to its people, its stock and its land can be held up as an example of what can be achieved when good leadership and good people go hand-in-hand.” . . .

Landcorp ready to run Crafar farms – Andrea Fox:

State farmer Landcorp says its Chinese client Shanghai Pengxin will settle the Crafar farms purchase with receivers on November 30 and it is scheduled to start managing the dairy farming estate the next day.

Landcorp chief executive Chris Kelly said that to the best of his knowledge this was the timetable that would mark the end of the tortuous three-year Crafar farms sales process.

Landcorp’s management of the 16 central North Island farms is a condition of Government consent to the controversial sale to the Chinese company, which has waited through a string of court challenges and consent processes to put its money on the table as receiver KordaMentha’s preferred bidder. . .

Wool growers asked for $10m – Gerald Piddock:

Wools of New Zealand is asking for $10 million from strong wool growers in a capital raising offer to expand its sales and marketing capabilities.

The raising would give strong wool growers the opportunity to invest in a grower-owned sales and marketing, company, chairman Mark Shadbolt said.

The company has made significant inroads into transforming Wools of New Zealand into a commercial entity, aimed at connecting customer to grower, he said. . .

Wine sector senses a whiff of recovery – Claire Rogers:

The wine industry is on the mend after a gruelling few years that prompted a string of closures and collapses, New Zealand Winegrowers says.

One recent high-profile casualty, Hawke’s Bay winery and vineyard Matariki Group was put into receivership in September owing creditors, including the Government, about $11.2 million. Receivers PricewaterhouseCoopers said the winery struck financial trouble after reduced harvests in 2011 and 2012 led to weak sales, and that was compounded by a lack of capital.

New Zealand Winegrowers chief executive Philip Gregan said the 2012 harvest was down 19 per cent on 2011, and that had dealt another blow to the industry, which had been struggling since 2008 with over-supply and weak demand from the global downturn. . .

Sea air tenderises spring lamb – Jon Morgan:

Logan Brown’s head chef Shaun Clouston takes a bite, chews thoughtfully, swallows and then licks his lips.

“By crikey, that’s beautiful,” he says, shaking his head slowly, wonder in his voice.

On the plate is a lamb rump, finely sliced, with kumara, crushed peas and roasted tomatoes. It’s a simple dish. “I want the lamb to be the hero,” Clouston says.

This is not any lamb. The meat is from a young spring lamb, only 4 months old when it was sent to slaughter, and from a farm on the coast south of Whanganui. . .

Kiwi to Lead International Tree Society

A Dunedin arborist became the first-ever Australasian president of the International Society of Arboriculture (ISA) last week.

Mark Roberts, an experienced arborist and academic director of horticulture training firm Thoughtplanters, is the second non-American elected to lead the 88-year-old society.

More than 20,000 arborists from 18 countries are members of ISA today. . .


Rural round-up

October 23, 2012

New growing sites may help save kiwifruit - Jamie Morton:

The Psa bacterium is here to stay so growers must manage it, says horticulture expert.

Kiwifruit growing regions outside the Bay of Plenty could soon play bigger parts in a $1 billion-a-year industry battling a bacterial scourge that is here to stay.

Professor Ian Warrington, co-president of the International Horticulture Congress, has suggested ways New Zealand could live with Psa-V, which has now spread as far as Hawkes Bay since its discovery in heartland Te Puke nearly two years ago. . .

Landcorp denies Crafar farms ale meddling – Andrea Fox:

Landcorp chief executive Chris Kelly says he’s getting fed up with suggestions that, as intended Crafar farms manager for Chinese purchaser Shanghai Pengxin, he is frustrating iwi efforts to buy two of the central North Island farms.

The state-owned enterprise boss said he had heard the rumours and they were “simply not correct”.

However he said that as the two farms at Benneydale constituted a significant 25 per cent of the whole 16 farm Crafar estate package, personally, he would be asking Landcorp’s future Chinese partner to consider why it would want to sell them. . .

 

Trial may be of global importance:

The Clutha Agricultural Development Board’s latest project, on the value of probiotics to calves in their first few weeks of life, is believed to be of national and possibly international importance.

The project involved about 300 calves on three farms in the Clutha district.

In New Zealand, only one limited study of the possible weight gain and health benefits to calves has been done previously, and the board was thought to be undertaking a “significant study of national and perhaps international importance”, the board said. . .

Future of sheep farming ‘not flash‘ – Sally Rae:

The potential for New Zealand’s primary sector is significant but the industry must get better at how it takes its products to markets, both individually and collectively, New Zealand Merino Company chief executive John Brakenridge tells Agribusiness reporter Sally Rae.

Imagine New Zealand without sheep and without a sheep industry.

That is a scenario New Zealand Merino Company chief executive John Brakenridge poses.

A scenario that he says is “actually quite on the cards” if the status quo continues. . .

Bettering deer genetics just the job for Sharon – Sally Rae:

Sharon McIntyre reckons her new role as DEERSelect manager is about “a perfect fit” for her skill set.

The Gore-based farm consultant, who has been heavily involved in genetics for 25 years, was enthusiastic about the part-time position.

She has provided technical assistance to Sheep Improvement Ltd (SIL) for five years and it was a “logical step” to be involved with improving deer genetics as well.

DEERSelect runs a system to evaluate the genetic worth of stags which then allows breeders and finishers to select for desirable traits in their deer herds. . .


Criticised for following law?

August 16, 2012

What is David Parker saying? (starts at 1:01)

. . . it was that it was a legal decision not the right decision. The Court found that the Minister acted within his powers to approve the sale of the Crafar Farms to the Pengxin Shanghai syndicate but not that he acted reasonably because that’s not their mandate?

Is he criticising Land Information Minister Maurice Williamson for following the law?

If he had acted illegally would that have been reasonable?

It might be on Planet Labour. But in New Zealand under National the government follows the law.


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