Selling Crafar Farms as unit limits buyers

The sale of the 16 Crafar farms as a single unit excludes most potential buyers.

Federated Farmers president Don Nicolson says:

“. . . our concern as a Federation is the receivers’ clear desire to sell the 16 farms as a complete unit.

“Federated Farmers does not believe Bayleys, KordaMentha or the Crown should remove the opportunity from New Zealand farmers to acquire individual farms. In saying this, we welcome Landcorp’s statement that if successful, it will move to sell down the portfolio.

Few individuals here, and not many overseas, have the desire and financial ability to buy 13 dairy farms and three drystock properties.

The receivers may be doing what they think is best for the banks for whom they’re acting in attempting to sell everything as a package, but this is a case where the sum of the parts might be worth more than the whole. Selling the farms individually may raise more money and it would certainly increase the number of potential buyers.

Feds is also concerned at what it sees as the underlying issue – the weakness of New Zealand’s capital markets.

“With relation to CraFarm, Landcorp is really the only bid we know of that doesn’t involve significant overseas capital.

“This probably still reflects the finance company implosion that burnt through vast amounts of domestic capital. New Zealand is utterly dependent upon overseas capital and rectifying this is a major policy challenge for Government and an issue for corporate and rural New Zealand.

“Farms and businesses are still being bought and sold but that’s largely using foreign capital, either directly through outright sale or indirectly through lending from banks, much of which is using overseas funds. . .

The Federation is reviewing its policy on overseas investment too:

“. . . We cannot stifle the entrepreneurial endeavour of New Zealanders wishing to realise the value of their hard work.

“Yet equality of investment opportunity must, I believe, become part of our trade negotiation stance. If we can not secure freehold title abroad then that must be reciprocated in our country-by-country trade agreements.

“This is not the nuttiness from the political fringe, which suggests keeping New Zealand only for New Zealanders. Bumper sticker slogans don’t make for good public policy and if Australia applied that to us, we’d see some upset Kiwis losing their investments over there.

“Overseas investment can be extremely positive, as Shania Twain’s 2004 purchase and development of Motatapu and Mt Soho stations has shown. Kiwis likewise own farms in Canada as well as the Americas, Europe and Australia but it’s based on equality of opportunity.

I am cautiously supportive of foreign ownership of land and see many benefits in an injection of foreign capital. However, not every country is as liberal about foreign ownership as we are and this raises an element of unfairness.

Don raises a good point that if we let foreigners buy our land we ought to be able to buy theirs and reciprocal purchase rights could be something to consider in  trade negotiations.

2 Responses to Selling Crafar Farms as unit limits buyers

  1. JC says:

    The Feds comments on capital tie in with something I read the other day..

    It seems that Kiwisaver is going great guns.. but at the same time its cannibalizing other investment schemes at the rate of (IIRC) about a billion per year.

    If the Govt is going to continue its tax payer provided very heavy support of Kiwisaver plus provide its implicit risk free guarantee then it becomes incredibly important that the scheme invest capital locally rather than chase the big dollars overseas; and that local investment be directed to enhancing national objectives.



  2. Gravedodger says:

    This post is very much along what have been trying to say on this matter but!!!
    As I pointed out elsewhere your well made concerns Ele, on the abysmal rate of return on the assets held by Landcorp and the proven reluctance to sell any of the existing portfolio during the boom times seen during the term of the recent Labour govt, I am extremely cynical about any undertaking to on sell any of the land held or purchased here.
    Landcorp has become a bit of a typical govt monolith and a testament to the widely held opinion of many with commercial experience among us that the government should keep the hell out of commercial business and that goes for local government as well.
    A serious flaw in the law surrounding receiverships is the very weak position of lesser ranked debt and the exposure those others owed money below the first ranked securities including any residual equity held, in this case by the Crafer family are left in, when the receivers have done their statutory work.
    Landcorp and its antecedents had a legitimate role in the historical closer settlement of Returning soldiers and civilians on farming units (which invariably rapidly became seen as to small), but in these times of proven efficiency gains with vertical and lateral integration of the farming business model all or pretty much all of the reason for Landcorps existence has to be consigned to history. However the people who benefit from its continued operation and the socialistic attitudes of many in a position to “put it down” are going to fail all taxpayers by failing to do the right thing.


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