We benefit from investment

Quote of the day:

“Both sides see our future in the dynamic markets of Asia. At issue in this Forum was how we could work to make this a reality.  There was agreement that business needs to step up to articulate this vision more forcefully to domestic stakeholders, to develop new business models connecting with regional supply chains and to work with governments to promote both the development of Asia-relevant skills as well as a range of policy instruments which will foster greater economic integration in the region.

‘Be open to investment in rural land’

“Chief among these is the need to maintain an open and welcoming environment for foreign investment, including in agricultural land,” Ling said.

“Calls for a more restrictive environment for foreign investment can only hinder business development by making it harder to access capital and develop key relationships in Asia and beyond. The cost will be slower economic growth and fewer jobs,” he said. Australia New Zealand Leadership Forum co-chair and Fletcher Building CEO Jonathan Ling

18 Responses to We benefit from investment

  1. robertguyton says:

    ““Chief among these is the need to maintain an open and welcoming environment for foreign investment, including in agricultural land,” Ling said.”

    By ‘investment’, Ling means ‘the sale of’, right?
    When our commentators talk of China ‘investing’ in farmland here in New Zealand, they mean buying it, don’t they?

    Like

  2. homepaddock says:

    Yes, Robert.

    Like

  3. JC says:

    That’s interesting..

    When the Americans, Germans, Dutch, Poms and Aussies aquired 600,000ha of land here over the last decade they were “investing” in it, but the Chinese are “buying” it.

    Investing has certain connotations, ie, it usually means that its bought for profit making.. buying tends to mean a purchase for personal use; eg, we “buy” a house to live in it but we “invest” in a house when we want to make a profit out of it.

    Another connotation of “buying” land is to deny it to someone else, to speculate or to control it..

    Either way, it appears there’s something unclean and unholy about a coloured race buying land in NZ.

    JC

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  4. robertguyton says:

    JC – what pish! As Ele confirms, ‘buying’ is the right term. Your attempt to whip up racist heat is a bit daft, imho.

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  5. JC says:

    RG, You were the one who quibbled over the word “investing”, so I took that to mean there are nuances which provide more favour or disfavour to either word. Lets face it.. the Greens are notorious for using words to create scares, eg, spanking becomes “beating”, mining becomes “exploiting” etc.

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  6. adamsmith1922 says:

    NZ has always been dependent on foreign capital. In the 19th century much land was developed by British investors.
    Currently there is far too much anti-business sentiment being whipped up by many who should know better for a wide variety of reasons.
    Much of the rhetoric does have a racial overtone whether Robert chooses to agree or not

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  7. ploughboy says:

    i dont mind overseas investment in farm land if it means that person moves to new zealand and farms that land themselves..what im against is corprates, wether they are the harvard investment fund german or chinese corprates, doesnt matter what country they are from ,

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  8. adamsmith1922 says:

    Which is better an investor who buys a farm, puts in capital tobring property to optimum and employs first class management to run the property, or someone who buys a farm to live on, but cannot afford the necessary capital investment or declines to so do

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  9. ploughboy says:

    an invester who is a owner operater who has the capital who does place up.
    while adam i have always enjoyed your blog and thoughts you seem to me on this issue (as your post above) to believe that the majority of farms need alot of capital spent on them. and that only the overseas invester will do this.
    if the pathway to farm ownership closes the will be now where for the first class manager to progress.

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  10. homepaddock says:

    Is there much difference between an absentee owner who lives in NZ and one who lives overseas?

    It’s not where they’re from or where they live but what happens on the farm that matters.

    There are a lot more constraints on foreign owners than local ones.

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  11. ploughboy says:

    to a sharemilker trying to buy there first farm a absentee nz owner would be much better than an overseas buyer.
    as i said before corprates are what im against.
    whos to say that oversaes buyers(corprates)will be better guardians of the land than new zealanders.
    there are plenty of farmers that are critical of the ways of some of new zealands own corprate/multi farm manages like farm right,my farm,dhl.there reputation will stock ,contracts with sharemilkers is not great.
    i dont see why overseas corprates are seen as white knights.

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  12. homepaddock says:

    Why would local absentee owners be better or worse than overseas ones?

    NZ corporates buy farms too, and you’re right they’re not always good at running them.

    I don’t see overseas corporates as white knights but nor do I see them as devils.

    Some will be great, some will be dreadful and some will be in between, just like NZ landowners be they individuals, partnerships, corportates.

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  13. robertguyton says:

    “Some will be great, some will be dreadful and some will be in between, just like NZ landowners be they individuals, partnerships, corportates.”

    So there’s no clear advantage in having absentee, foreign owners then. There is an extra disadvantage though, and that is, the price that has to be paid to buy a farm owned by a foreign ‘owner of New Zealand soil’, is far greater, as foreign investors are possessing of greater funds than we are. There’s even the scenario where foreign companies have access to money from their own Government to add to that advantage, as is suggested with the Chinese ‘investors’. Ploughboy’s right – the land goes out of reach of New Zealanders wanting to own their own farm in their own land.

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  14. homepaddock says:

    One advantage from foreign ownership is less debt in NZ because they usually bring their money in.

    If a foreign owner pays more then the seller gets more to invest here or overseas.

    Landcorp and private companies in NZ have also paid more than individuals have been willing/able to and given how few total sales are to foreigners that would be a greater influence on price and the ability of other would-be owners to buy.

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  15. JC says:

    “Ploughboy’s right – the land goes out of reach of New Zealanders wanting to own their own farm in their own land.”

    That would be a fair point if there were so many foreign sales that general dairy farm prices rose significantly.. but thats not the case.

    Dairy farm prices started to explode 20 years ago as NZ farmers got into dairying in a big way to cash in on the new wealth. They were the ones who blew the land prices out of reach.

    JC

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  16. ploughboy says:

    ten years ago foreign buyers were not buy up large amounts of land..i would say it only been the last five years that this has become a problem.

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  17. JC says:

    “.i would say it only been the last five years that this has become a problem.”

    Nope, you can check this for land price history:

    http://tinyurl.com/7xh7kof

    Basically, dairy land prices dropped about 40% from the mid 80s to 1989. Thereafter prices soared as farmers adjusted to no subsidies and strong commodities growth. Productivity on dairy farms increased from 0.07% in 1985 to 1.9% in 2000.
    South Island dairy land prices increased 11.6% annually 1991-2007 and overall dairy land prices increased 8% pa 2000-09.

    Two other factors affected the prices..

    Dairy farm sizes increased from 63-134ha 1981-2009 and herd sizes went from 130-376.. and the number of dairy farms decreased from 16000 in 1981 to 11700 2009.

    So the history to the present day looks something like this:

    Labour cut out the subsidies on farming in the mid 80s, that made small farms uneconomic so bigger farmers bought out their smaller neighbours and farm sizes and herds increased. By the early 90s bigger, more efficient farms caught the commodities boom and the banks were happy to lend.

    But by 2008 dairy farmland prices started to impact severely on profitability, banks tightened lending policies and foreign money became more important in propping up the industry.
    However, I see this as temporary as existing farmers improve their balance sheets and start the next wave of land rationalisation and productivity improvements. I expect farm and herd sizes will increase again and farmers to increasingly partner up with foreigners.

    One other thing.. NZ investors are looking hard at places like NSW to invest in dairying because theres plenty of big spreads and much lower land prices.. that could put the brakes on dairy land prices here.

    JC

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  18. ploughboy says:

    yep agree with your last post
    the question is when overseas buyers entered the market..while there always has been some dairy land sold to these buyers i would say more has been sold in the last five years than before.

    would be great if foreign buyers did partner up while young local buyers,and let them provide a meaniful amount of equity.would be a win win

    Like

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