Foreign ownership boosts wages:


Trans Tasman on foreign ownership:

The proposed sale of the 13,800ha Lochinver Station, near Taupo to Shanghai Pengxin, which bought the Crafar Farms in a joint venture with Landcorp, reignited the political debate about foreign investment and purchases of Kiwi land. Labour has promised to block the sale if it is not approved before the September 20 election and stop land sales over 5ha except in rare circumstances. Finance spokesman David Parker says land sales to foreigners do not increase output and do not release capital to be reinvested by the NZ owner to create new jobs. Finance Minister Bill English, however, reckons the Govt has struck the right balance between attracting foreign investment and tightening the rules for overseas investment in sensitive land.
Public Disquiet. Chinese investors have been making other investments in the farm sector: they have a minority stake in Blue Sky Meats and the Overseas Investment Office is considering an application to buy Prime Range Meats. Farm leaders have become disquieted. Federated Farmers supports positive overseas investment in NZ’s farming system but is concerned there would be little benefit to NZ if the Lochinver deal is clinched. President William Rolleston says “NZ absolutely needs foreign investment” but only if it benefits the local and national economy. He wants a “substantial and identifiable” benefit test incorporated in overseas investment eligibility criteria. Public opinion survey results this week suggest a majority of voters similarly approve of farm sales to foreigners only when it brings a significant advantage over an NZ buyer such as jobs. Almost 33% want farm sales to foreigners banned.

National raised the already high hurdle foreign buyers have to jump before a purchase is approved and benefits above and beyond those sales to domestic buyers would provide is one of the criteria.

 Better For Workers. An upcoming working paper by Motu Economic and Public Policy Research economists throws some light on the economics by examining how employment in foreign-owned firms affects NZ workers’ earnings. Using data from Statistics NZ’s Integrated Data Infrastructure, which tracks workers as they move between firms, the researchers found workers in foreign firms tend to receive, on average, around 14% higher monthly starting earnings than workers in domestically-owned firms. Compositional differences are the main explanation: foreign firms tend to be bigger and employ workers who would have received relatively high wages regardless of where they worked. The authors also found under-25 year olds get greater gains from joining a foreign firm and smaller losses on exit than older groups, while more highly skilled workers attract a stronger wage premium while working in the foreign-firm sector. In short, foreign firms not only tend to hire more highly skilled workers; they also remunerate these workers more generously.

A very small percentage of land  – around 2% – is in foreign ownership now.

The problem is one of perception based on emotion taking no account of the facts and benefits which include better wages for staff employed by foreign owners.

Rural round-up


The circus of foreign ownership – Dr William Rolleston:

The Election has suddenly sparked into life. It was not a policy, a pratfall or a stunt, but Shanghai Pengxin Group’s Overseas Investment Office (OIO) application to buy Lochinver Station.

While Federated Farmers has taken the principled position of trying to learn what the ‘substantial and identifiable benefit’ to New Zealand is of this proposed sale, others have gone off the proverbial deep end.  National has been far too dismissive of concerns being raised in some quarters. Labour has gone to the opposite end by announcing they’d block the sale, along with the Greens.  Meanwhile, NZ First will go further and stop all foreign sales of New Zealand farmland.  That seems to be the position of Colin Craig, who stepped into Mr Peters shoes by breaking this story.

What everyone seems to have forgotten is process.  Our overseas investment rules are meant to operate on fair play under the guise of the OIO.  Instead, it has turned into an election political circus. The coverage of which, has gone global, given the media who have contacted me. . .

Meat and fibre’s time to shine – Rick Powdrell:

Boy oh boy, doesn’t it feel good to be a sheep and beef farmer for once. Of course it wasn’t always that way.  We were the dairy industry for decades, almost as soon as the Dunedin slipped out of Port Chalmers in1882, we rode the sheep’s back.  The good times operated under a simple business model.  We grew meat and fibre and Britain needed it.

Through war and peace, these good times seemed destined to run forever.  Our success blinded us to what the bright sparks at companies like DuPont were doing.  That was until they ‘wool-jacked’ us with oil based fibres.  That wasn’t helped by lamb being seen in the 1970s as your grans’ meal. You could have lamb cooked anyway you wanted as long as it came in a roasting tin.  Other meats became trendier and in some instances, cheaper, while our industry was trapped in a Sunday roast.  . .




Demand drops for malting barley – Annette Scott:

A shrinking number of Kiwi beer drinkers is creating less demand for malting barley.

As beer consumption falls, coupled with higher prices for New Zealand barley, breweries require less malt and malting companies less barley.

Marton-based malting company Malteurop NZ operations manager Tiago Cabral said New Zealanders’ drinking habits were having an impact on the company. . .


Worth sharing - thanks The Horse Mafia

NSW $10m beef deal with China – Roderick Makim:

NSW beef suppliers have secured a $10 million export deal to the Chinese market.

Producers including Andrews Meat Industries in Lidcombe and the Northern Co-operative Meat Company Ltd in Casino are among the NSW suppliers involved in the deal, Deputy Premier Andrew Stoner said today.

Mr Stoner announced the deal while visiting Hong Kong and Shenzhen for a three-day trade mission along with representatives from a range of NSW food companies. . . .

IP can go land can’t


A large majority of New Zealanders want the government to clamp down on farm sales to foreigners.

The latest poll suggests three-quarters of voters say it should be made harder for foreign investors to buy large tracts of farmland, while just under a quarter say it should not.

Click here to see full graphics

But opinion was more evenly divided over whether too much farmland had already passed into foreign ownership, with 52 per cent agreeing and 41 per cent disagreeing.

I suspect many of those asked wouldn’t know how much land is in foreign ownership or understand the figure if they did.

Few would understand the difference between productivity from a very small area of prime horticultural land and a large area in the high country either.

However, a majority of people questioned for the poll also thought foreign investment benefited the economy. . .

Of course it does.

Foreign investment brings money into New Zealand, helps employ New Zealanders and develop assets, including but not only land.

Why do land sales cause an uproar when company sales do not?

Has anyone noticed an uproar over Golden State Food’s purchase of Snap Fresh?

Golden State Foods (GSF), one of the largest diversified food processors and distributors in the U.S., announced today that it has acquired ownership of Snap Fresh Foods, a New Zealand-based provider of premium salad greens, vegetable mixes, baby-peeled carrots, fresh sprouts, dressings and condiments. The acquisition of Snap Fresh Foods includes two facilities in New Zealand that service that region as well as export to China.

“We look forward to expanding our regional produce foodservice business into the fast-growing retail sector with such a strong and successful brand as Snap Fresh Foods,” said Neil Cracknell, executive vice president and chief operating officer of Golden State Foods. “The addition of Snap Fresh provides great growth opportunities for GSF particularly in the retail salads segment, while providing new products and capabilities to our existing food service customers in the region.”

The only reaction I’ve noticed is this exchange on Twitter:

We have a lot to gain from foreign investment.

If there are concerns about potential losses too any change to rules should be based on facts not emotion – and keep in mind that intellectual property is portable and can be taken from New Zealand but land isn’t and can’t.

No need to tighten foreign ownership of farm land


Labour is proposing tightening rules round the sale of farm land to foreigners.

The sale of farms to overseas investors will be restricted under proposed new legislation, Labour’s MP for Mount Roskill Phil Goff says.

“My Overseas Investment (Owning our Own Rural Land) Amendment Bill will be debated by Parliament after being drawn from the Member’s Ballot today.

“John Key once said ‘New Zealanders did not want to become tenants in their own land’. He never did anything about that; this Bill does.

“It stops wide purchase of New Zealand land by foreign investors unless significant benefit to New Zealand can be proven.

“Labour believes Kiwis are concerned about farms being sold to foreign buyers when there is no benefit to New Zealand. . .

Over at Keeping Stock Inventory 2 points out the hypocrisy in this when Labour had no qualms about selling the equivalent of 122 rugby fields a day when it was in power.

If those sales had caused problems a change of heart would be understandable but this policy isn’t based on principle, it’s appealing to emotion and is an attempt to out-Winston NZ First for the xenophobic vote.

Existing rules are already very tight and and place strict requirements on the purchasers.

This can provide more benefits for New Zealanders than if the land was sold to locals by, for example, requiring public access.

Foreigners might have more capital for development than locals too.

Property near us has just had Overseas Investment Office approval for sale to foreigners.

Their development plans require at least five new houses for extra staff. They are also planning to build another dairy shed which will require more staff and another couple of houses.

That will provide significant economic and social benefits.

They will be getting water from the North Otago Irrigation Company which requires independently audited farm environment plans each year which will ensure they look after water and soil quality too.

Labour’s trying to reconnect with the provinces but this policy is more likely to appeal to city people who never come closer to farming than a fast journey down the open road on the way to somewhere else.

Those of us who live in the country know it’s not who owns the land but who lives on it and what they do with it which has nothing to do with where they come from.

Owners’ nationality irrelevant


The headline says: public land access restricted due to foreign ownership.

The story starts:

One of the country’s largest farms is the latest to be snapped up by foreigners, in this instance a North American investment group.

The massive property near Oxford is the size of Christchurch, the sale figure is undisclosed. 

Outdoors enthusiast Stewart Hydes wanted conditions put on the sale, but says his appeal to the Overseas Investment Office was rejected.

He’s worried about the loss of vehicle access as more and more landowners are closing private roads, locking up the public land beyond. . .

The video follows with a couple of examples that back up the idea that foreign ownership is the problem.

But the third example is a New Zealander and he restricts vehicle access for good reason – he’s had too many people who’ve abused it.

He’s not alone.

the owners’ nationality is irrelevant. Anyone with high country land could write a book about problems with people who disturb stock, leave gates open, damage fences, leave rubbish and human waste . . .

We’ve got a hill block with a paper road though it but it stops short of the boundary with the DOC estate. Hunters with DOC hunting permits ask permission to get from the end of the road to the DOC land and we’re happy to let them walk across the paddocks – it’s only a few hundred metres.

If people ask for permission to tramp on our land we give it but we’re not going to let strangers drive all over the farm, for the sake of our paddocks and stock and their safety.

The last visitors who drove beyond where the paper road ended, in spite of warning not to, had a very long walk back and their vehicle had to be retrieved by a bulldozer.

Life’s changed from a few decades ago when few people could get off-road except on their own feet.

Lots more people own four-wheel drive vehicles. Not all of them have the skill to tackle off-road driving and even if they do few farmers – Kiwi or not – would trust people they don’t know to give open access to their properties.

It’s nothing to do with the nationality of the owners, it’s too many bad experiences with visitors who have no for respect private property and don’t follow the request to leave only footprints and take nothing more than photos.

Feds seek foreign land register


Federated Farmers wants a foreign land register to provide more information on farms and rural businesses in overseas ownership.

National president Bruce Wills told the Primary Industry Forum his organisation supports foreign investment because the country was built on it and can’t progress without it.

He says the Overseas Investment Act strikes the right balance and Federated Farmers wouldn’t support further controls on foreigners buying farmland.

But he says more information is needed about the amount of land in foreign hands. . .

I don’t think we need any more controls on foreign ownership but it would help the discussion if there was better information on the issue.

We know when foreigners buy land but we don’t always know what happens to it after that.

If a foreign buyer sells to another it will need Overseas Investment Office approval and become public but sales to New Zealanders aren’t always publicised.

Nor do we always know if the foreigners who buy land or businesses are residents about which most people have fewer reservations.

However, a report by the New Zealand Initiative does debunk several myths including:

Myth: Asians are increasing taking over New Zealand.
Fact: It is Australians who have largely been taking over New Zealand. In the year to March 2012, they own 55.8% of foreign investment – up from 31.5% in March 2001. In March 2012, Asian investors owned just 3.1%.

Myth: New Zealanders are becoming tenants in their own country.
Fact: Of the 28.7 million hectares in New Zealand, only one million is owned by foreigners, while the Department of Conservation alone owns eight million.

Myth: Foreign investment is a one-way street with New Zealand an easy target.
Fact: New Zealand has one of the most restrictive regimes in the world and there has been no obvious upward trend since 2000 relative to GDP. New Zealand investment abroad has dropped slightly from just above 13% relative to GDP in 2002-03 to 12% in 2012. This up markedly in dollar terms since the 1990s.

The report is here.


Will there be a snap debate on this too?


On Tuesday parliament had a snap debate on the sale of what were the Crafar farms to Shanghai Pengxin.

It was called by the Opposition who, for reasons which are based far more on emotion than reason, are opposed to selling farm land to foreigners.

Last night Russel Norman’s Bill to restrict the sale of land greater in area than 5 hectares was defeated.

The bill was defeated by 61 to 59 with National, United Future and ACT opposed.

Quite why the Opposition have such an attachment to farmland when their policies show they have little understanding of farming or interest in its success escapes me.

I also don’t understand why farmland engenders such emotion when sales of companies like this go unremarked:

Foley Family Wines, owned by the California-based billionaire Bill Foley, will take control of New Zealand Wine Company, adding the Grove Mill, Sanctuary and Frog Haven brands to its suite of local wines.

NZ Wine Co shareholders approved the merger at a special general meeting in Blenheim today, with about 99 percent of votes cast in favour, the company said in a statement. 

The merger, which will see Foley take an 80 percent stake in the Marlborough-based company, has not yet been approved by the Overseas Investment Office.

Foley already owns the luxurious Wairarapa Wharekauhau estate and is chairman of two Fortune 500 companies, insurance firm Fidelity National and banking and payments technology company, Fidelity National Information Services.

He also owns the Vavasour, Goldwater, Clifford Bay and Dashwood wine brands.

NZ Wines shares are listed on the NZX alternative market and last traded at 92 cents.

I have no problem with this investment or foreign investment in general. Bill English explained earlier this week the country has a lot to gain from foreign capital.

But if the control of farm land and its produce by foreign owners exercises the opposition, why aren’t they equally concerned by what looks like a significant investment in another primary industry?

Could it be it’s not foreign investment per se but the nationality of the investors which is at the root of the opposition to the Crafar farms by the Opposition?

Contributions to Tuesday’s debate included speeches from Maurice WilliamsonTodd Mclay, Jonathan Coleman, and David Bennett.

And yesterday’s debate on Noramn’s Bill included this speech from Jonathan Coleman who had to withdraw the comment daconomics but introduced the term yokelnomics:

“Live it and love it” x factor in farm success


Opponents to foreign investment in farmland are concerned that too few farms will be left in New Zealand ownership.

No-one has defined how much is too much and for some any farm land in foreign ownership is too much.

But Finance Minister Bill English says the owner-operator model is likely to be the one which continues to succeed here:

Large-scale local and foreign corporate farm owners soon realised they had to ‘live it and love it’ in order to make any money out of farming in New Zealand, English told the Victoria University-Peking University Conference on Contemporary China in Wellington. . .

. . . Speaking to media after his speech, English said New Zealand had experienced waves of anxiety about foreign ownership of Kiwi farms.

“They come and go. At one stage the Japanese were going to buy all our farms, then the Indonesians were going to buy all our farms, and both overseas and local corporate owners have never really succeeded in making very large farm operations viable,” English said.

“So while the Crafar farms have been high profile, if you look back over thirty or forty years, large scale farm ownership often fixes itself because the owners find that they can’t do as well as the owner-operator model,” he said.

“I think the owner-operator [model] is how New Zealanders see their agricultural industry based.”

Rabobank in Australia found that $10 to $13 million dollar farms were the most profitable and I wouldn’t be surprised if the same applied here.

These are larger family farms. Smaller ones lack economies of scale and bigger corporate ones tend to have problems over governance and management and/or take a lot of money to make money.

Landcorp is an example of the latter. It has a good record for animal welfare, environmental practices, staff training and retention but it makes a very small – about 2% – return on capital.

We’ve got several dairy syndicates in our area in which investors have made little money and some in which they’ve lost lots.

Family farms aren’t all successful, the Bell curve operates in farming too, there are good, bad and in between ones for all models. But most farms in this country are still owner-operator ones.

It’s the model which works well here and that live-it-and-love-it factor is a very important ingredient in their success which no amount of outside investment or expertise can replace.

More urban land than rural foreign owned


The idea that New Zealand was passing into foreign hands is a myth according to Terralink managing director Mike Donald.

The Sunday Star Times (not online) reports that 280,000 hectares of rural land has been consented for sale over the last seven years.

That’s less than 1.5% of the country’s total rural land and most of it has been bought by people or organisations based in the USA, Britain and Israel.

Furthermore the amount of productive land bought by foreigners each year has dropped sharply over the last decade.

Overseas Investment Office figures show 15,242 hectares of farming and forestry land was consented for sale to foreign buyers in 2011, significantly down from the 48,828ha in 2001 and the least since 2007. The total combined area of the Crafar Farms was 7900ha. Rather than the nation’s dairying being put up for grab, it was commercial and industrial land that outstripped other categories.

Nearly 5 per cent of all industrial land in New Zealand has been consented for sale to overseas person or entities.

It isn’t clear if that includes land already owned by foreigners or whether it was all sales of land owned by New Zealanders.

Whichever it is, that’s not a big area of rural land which highlights the stupidity of Green co-leader Russel Norman’s Bill to prohibit the sale of “sensitive” land to foreigners.

He defines “sensitive” as anything more than .05 square kilometres (about 12 acres) but the figures show that if there’s a problem with too much land in foreign hands, it’s with urban land, which is sold in smaller parcels, rather than rural which is usually sold in larger blocks.

Why would it be alright to sell a horticultural property or lifestyle block to foreigners but not a livestock or cropping farm? Why is farmland more sensitive than land for factories, housing or shops?

That said, Donald does point out there could be grounds for concern if consents for sales of farmland to foreigners continue at the same rate as they have been over the last seven years.

The discussion then shouldn’t be on how much land an individual foreigner can buy but how much land in total should be owned by foreigners.

I don’t have any concern about less than 1.5% of farmland being in overseas ownership and I would be opposed to a blanket prohibition of farm sales to foreigners. However, I can see cause for concern if too much land was in foreign hands.

Quite how much is too much is a matter of debate and it would be far better if the effort was put into determining that rather than banning foreign ownership of farms outright.



Trees bigger threat to farmland?


When we were on a farm tour of the East Coast last month we saw some land which looked as if it shouldn’t have been cleared of bush in the first place.

That was being addressed by replanting.

But we also saw good farmland which wasn’t at risk of erosion being planted in trees.

Federated Farmers believe this is a far greater problem than foreign ownership.

President Bruce Wills says the sale causes a minimal threat to New Zealand agriculture, when compared with the expansion of forestry.

He says 13,000 hectares of dairy land have been sold to foreign buyers since 2002, but in the same period, 1.78 million hectares of forestry have been sold to overseas investors.

Mr Wills says the debate about foreign investment in farm land needs to be extended to all land types.

He says more than 70% of New Zealand’s forests are now owned offshore.

The ownership of the forests doesn’t worry me but the waste of productive land and the impact on employment and local communities does.

A truck and trailer will carry about $3,000 worth of logs and it will be decades before the next harvest from that land.

A truck and trailer could carry about $50,000 worth of lambs and there will be another load from the same farm next season.

Who pays if land can only be leased to foreigners


David Mahon, managing director of Mahon China Investment Management suggests long-term leases could be better than selling land to foreigners:

Perhaps there could be a trust that acquires agricultural land from anybody. So farmers can sell, in a real sense, get value for their land, and then foreign buyers coming in acquire land through that trust. And that trust could base sales on the fact that all land purchased in New Zealand was leasehold.

But who pays for the land when it’s sold to the trust?

Tim Watkin suggests the government could:

Obviously private farmers can keep doing their thing, but if and when they want to sell, the government could bid and, should it win, build up a land bank to be leased to offshore investors. We all own the land, but we still attract foreign capital.

What if the government doesn’t win and even if it does, is buying more farm land the best use of public money ,especially when public debt is so high?

Oh for some science on Crafar farms sale


When the Prime Minister announced the mental health package last week his chief science advisor Sir Peter Gluckman explained how it had been based on science.

If only a similar process could be applied to foreign ownership of land, in particular the sale of the Crafar farms.

In yesterday’s Q&A interview by Shane Taurima of Land Corp chair Jim Sutton tried to give the facts but Russel Norman mostly used emotion.

RUSSEL         Well, we certainly don’t need this foreign investment. I mean, all it’s doing in this case is driving up the price of rural land, because they’re paying a very large price for it in order to pay off an Australian owned bank who are the ones who are exposed because they leant too much money to Crafar.

The banks will get their money before anyone else. Those who miss out will be the unsecured creditors, most if not all of which, will be small, locally owned businesses. Each day the sale is delayed the costs increase, eating in to what will be left for creditors.

So we don’t need this money.

No? It’s better for us to have more foreign debt than equity?

This farm was going to be developed one way or another. It would be producing food one way or another. The key thing for New Zealand is we have this tremendously valuable strategic asset, which is arable land with access to water, food-producing land. That food-producing land will only become more important as time passes, and for us to hang on to that strategic asset is critical to our economic future.

It’s not one farm but many. If they’re not developed by a foreign owner they might be developed by a local one, or ones, but there will be no oversight of that nor recourse if they’re not. And if the development is undertaken it will be funded by borrowing from foreign lenders.

SHANE           Mr Sutton, New Zealand First leader Winston Peters, he says that if the deal goes ahead, it will mean Landcorp will end up paying about $18 million a year to the landowner. In other words, he says a New Zealand SOE will end up being a tenant of a foreign company here in New Zealand. Is that true?

JIM                 No, that is not true, and I think what is important to realise is we as a sovereign nation are perfectly entitled to make rules for foreign people wishing to buy farmland in New Zealand, and if we want to do that and have more restrictive rules than we have got, let’s do it, let’s make it clear what they are, and let’s apply them without fear or favour to everybody who comes from overseas and wants to buy a farm in New Zealand.

Exactly, we should make the rules and apply them fairly.

SHANE           Can I just clarify – so Landcorp won’t be paying any rent at all?  

JIM                 No, we won’t be paying rent. We’ll be a share-farmer. A share-milker. SHANE           Mr Norman?  

RUSSEL         Clearly, what a share-milker does is they hand over a proportion of the production to the owner of the land in lieu of rent. It’s a kind of rent. So without mixing words, clearly they’ll be paying rent. They’ll be a tenant in the land, which is effectively what a share-milker does.

By Norman’s reasoning, the land owner is paying rent for the cows, machinery, animal health products and other inputs the share-milker funds.

SHANE           Mr Norman, don’t you have to be careful that you’re not encouraging an anti-Chinese feeling? After all, we’ve had a number of other nationalities buy land without the same reaction. Don’t you have to be careful?

RUSSEL         Yeah, I think that’s a fair comment. Um, the Greens have had a very consistent approach. I mean, we think that New Zealand land should stay in New Zealand ownership, um, and we don’t care the nationality of the person applying – whether they’re Australian, American or European or Chinese.

Just a teeny bit of irony when this is said in an Australian accent.

JIM  . . .  If I were Chinese looking at this and wondering whether New Zealand really had its heart in building the economic partnership with China, I would wonder why Canadians, Americans, Italians, Germans, Australians, Brits, can come into parts of New Zealand, buy farm after farm after farm after farm and nobody in Wellington blinks an eyelid. But when the first Chinese…

RUSSEL         The Greens do.  

JIM                 …company comes along for this, all of a sudden it becomes a threat to our sovereignty, and I just think,‘How would I feel about that if I were Chinese?’ And I know what I would feel about it. 

We know how the Chinese feel about it from another Q&A interview with David Mahon, managing director of Mahon China Investment Management who has lived in China for 25 years.

SHANE      Do we run the risk of having that reputation being tarnished if the deal doesn’t go through?  

DAVID       We do. Certainly this would be something that not just in China, but throughout Asia with our major trading partners and these sizeable economies – India, Indonesia – would look upon this as being New Zealand as a narrow country after all, that New Zealand actually is racist in terms of its view of who it would like to be its business partners, which I think would be a sad misreading of New Zealand, because I don’t believe that New Zealand is actually racist. I think that this particular Crafar deal has triggered some unfortunate debate in lesser media, and I think it has become politically useful to some in New Zealand, given the fact that, um, you know, we have a very dynamic democracy. And so, in a sense, the real issues, I think, have been lost. But if this doesn’t go through, New Zealand will have a lot of repairing to do across Asia and certainly in China.

There wasn’t a whisper when a controlling interest in Turners and Growers was sold to a German company, even though it owns the iconic ENZA brand.

There was some, but not nearly as much, murmuring about land sales to people from Germany and the United States. But there has been much more about this particular deal and it appears to be not just because the buyers are foreign but because they are Chinese.

I wrote last month about our visit to farms owned by a Swedish family which showed the good it can do.

If we shut the door completely on foreign ownership, we will be the poorer for it.

The rules on foreign ownership were tightened recently. If there is a need for further tightening, let them be tightened but base any change on sound reasoning not emotion and definitely not on xenophobia.

Act in haste . . .


Labour leader David Shearer had to make his mark in his Q&A interview on Sunday but he’s done it for the wrong reasons.

His proposed changes to the law on foreign ownership were a rushed response to the xenophobic reaction to the sale of the Crafar farms, so rushed it has some glaring errors.

Alex Tarrant pointed out yesterday that the media release gave the proposed Bill two different names and also:

In the rush to get this Bill written before Shearer appeared on Q&A on Sunday, you managed to indicate that you would repeal all environmental, heritage, conservation and walking access requirements on foreign landowners for Ministers when making their decisions.

Now I know you didn’t mean to do this – you told me so this morning – but if you’re going to go on national television and announce you’re presenting a member’s Bill to change one of this country’s laws, then I for one would be hoping you’ve given it serious consideration, had a few people look over it, and had another look at the actual legislation to figure out what you’ll be repealing.

Today Derek Cheng says:

The present law lists a number of factors ministers can consider in determining whether the bid would bring “substantial and identifiable” benefit to New Zealand. Among the factors are protection for native flora and fauna, heritage and cultural sites, and wildlife and walking access.

But Mr Shearer’s bill would wipe these factors completely, effectively meaning an application that ticked the box for more exports but destroyed the environment could get the green light.

He said yesterday there was never any intention to remove environmental protections. “And there may in fact be other issues raised at select committee that we would end up including in the bill too.

Of course there wasn’t any intention to remove these protections but mistakes like this look sloppy. They take attention from the proposal to yet another example of Labour looking like a poorly performing opposition rather than a government in waiting.

When you act in haste you get time to repent at leisure.

Shearer’s land law an ass


Labour leader David Shearer has listened to the xenophobes and come up with a new law to restrict land ownership by foreigners.

“A clean, clever and job-rich future is not going to be achieved by selling off our productive assets. Kiwis are overwhelmingly opposed to the sale of prime rural land, like the Crafar farms, to overseas investors. We are listening to them and are prepared to act in their best interests.

The Overseas Investment (Owning Our Own Rural Land) Amendment Bill would substantially limit the discretion of the Minister to consent to the sale of rural land to overseas buyers.

It would require the Minister to be satisfied that the overseas investment would result in the creation of a substantial number of additional jobs in New Zealand or a substantial increase in exports from new technology or products associated with the purchase.

Why don’t they just ban sales to foreigners outright?

It would be almost impossible to create a substantial number – whatever that might be – of additional jobs here from the purchase of a farm; new technology doesn’t necessarily increase exports – though it might make processing them more efficient and reduce jobs in the process.

“The Government already has discretion to turn down farm sales to overseas buyers but it is not being properly exercised. . . “

Would he rather ministers exercised the law as Chris carter did over the Whangamata Marina and have the decision overturned in court?

 Selling our farmland to foreign buyers does not improve our economy. Instead the profits simply flow offshore.

Not necessarily.

A friend manages a farming business for overseas owners who year after year put profits back into improving the farm and upgrading plant and machinery.

We also do not want to see New Zealand farms priced out of the reach of Kiwi farmers who are the best in the world at what they do.

Do they care that the equity kiwi farmers have in their land could be destroyed instead by falling prices instead?

The anti-foreign ownership campaign started with the sale of the Crafar farms, some of which were proof that not all Kiwi farmers farm well.

What’s better, locals farming badly without the expertise, will and/or money to do better or foreigners farming well?

Most people upset about foreign ownership either never will own farms themselves nor want to. A good number of them will never get closer to a farm than a glance out a window as they drive down a main road.

The nationality of who does own those farms will have no impact on them at all nor will it have any impact on how well the farms are run.

This law is not in New Zealand’s nor New Zealander’s best interests.

It’s an ass.

If Shearer and his party really want to help New Zealanders own farms they should address the cause of their inability to do so – lack of money.

Parker mistaken about Labour’s mistakes


David Parker has admitted he got something wrong:

Parker now says he approved too many land sales when he was Land Information Minister in the Labour government and that Labour “didn’t get it right on farm sales”.

That statement would have a lot more validity if he gave examples of which sales were a mistake and why. What are the new owners doing to their properties and its produce that makes him think the land would be better in New Zealand ownership?

He was concerned about the growing asset inequality in NZ. “Assets ought to be priced within reach of ordinary NZers.”

“Before the global financial crisis most successful bidders for Kiwi land were NZers, Parker said. Since the crisis there had been a significant change and the only way to sustain high prices was to sell on the international market, effectively shutting out the average NZer.

What he omits to say is that one of the successful bidders for a large amount of New Zealand farm land between 1999 and 2008 was the government which paid well above market rates for high country properties. Most notable was St James Station, which the Labour government bought for $40 million, plundering the Nature Heritage Fund in the process.

This is the mistake he ought to be admitting. While he’s doing a mea culpa he could admit the tax and spend policies his government practised were also wrong. They contributed to the blowout in bureaucracy and the housing bubble which contributed to asset inequality by putting urban property prices out of the reach of many.

With no evidence to support his statement on lands sales, he’s mistaken in thinking he made a mistake by approving too many. He’s  mistaken again in not admitting Labour’s mistake in paying far too much for high country farms and poor policies which put the productive sector into recession long before the global financial crisis.

Some more foreign than others


Why does an increasingly more urbanised population care so much about farmland?

Most will never own it nor want to; some may visit a farm but many will never get any closer to one than a trip down State Highway 1 at 100 kph, or faster.

In spite of that they’re very keen to have a say in who the owners can sell it to – or rather not sell it to.

At the moment any sale of five hectares or more of farmland must go before the Overseas Investment Commission if a foreigner wants to buy it.

I don’t have a problem with some oversight over land sales to people from other countries, but why five hectares?

Depending where it is that could be more than enough for at least one thriving horticulture business or not enough to carry a  single stock unit. Why doesn’t the ownership of flat, fertile land where the climate is temperate matter if who owns rough, hilly, less productive land where it blows and snows does?

If you looked at farms from the road you may be able to tell something about the owners’ ability as farmers but I doubt if you’d be able to work out where they came from. Even if you went on to the farms and spoke to managers and staff it probably wouldn’t be obvious if the owners were New Zealanders or not.

I can see why people wouldn’t want all or even most land owned by foreigners and I also understand the danger of vertical integration of the supply chain by foreigners. They can’t take the land with them but they could take the produce and valuable export dollars.

But it doesn’t need a total ban on land sales to foreigners to keep processing and some of the export returns here.

However, the anti-foreign ownership feeling isn’t just about people from overseas. A Curia poll (on which Cactus Kate, Kiwiblog and Whale Oil have commented) shows those asked regarded some people as more foreign than others.

Sixty five percent of people polled wanted land sold only to New Zealand residents. That dropped to 55% if staff were locals; 54% if the owners paid tax here; and 52%  if the extra capital from the owners tripled exports.

But the most telling result was on the question which moved from foreigners in general to specific nationalities. If the buyers were from Australia 18% were extremely uncomfortable and 42% weren’t uncomfortable at all; if the buyers were French 31% were extremely uncomfortable and 24% weren’t at all uncomfortable; if the buyers were Chinese 41% were extremely uncomfortable and 21% weren’t uncomfortable at all; if the buyers were British 23% were extremely uncomfortable and 31% weren’t at all uncomfortable and if the buyers were from the USA 27% were extremely uncomfortable and 24% weren’t uncomfortable at all.

This means that the opposition isn’t necessarily to foreign ownership per se – the strength of feeling varies with where the would-be owners come from.

That explains why the possible sale of the Crafar Farms to Chinese owners has caused an uproar but the actual sale of Big Sky dairy farm in the Maniototo to Harvard University’s global investment fund has hardly raised an eyebrow.

There is some logic in the desire for some control of farm sales to foreigners. But this poll shows that arguments for a total ban on sales to foreigners is based on emotion and one of those emotions is xenophobia.

Save whose farms from what?


A group of Aucklanders wants to Save The Farms .

Not from pests and diseases, high rates bills, compliance costs and a myriad of other real threats. They want to save us from the perceived threat of foreign ownership.

Rather than saving our farms, StF is threatening them.

It is an incorporated society whose purpose is to:

  • Maintain ownership by New Zealand citizens of all agricultural and sensitive land and land of cultural importance.
  • To gain an immediate Moratorium on the sale of this land to foreign investors.
  • To promote and stimulate informed public debate around these objectives in a non political and partisan manner.
  • To promote a revision of the Overseas Investment Act 2005.

To this end they want the government:

  •  to put a moratorium on the sale of the Crafar farms and other sensitive agricultural land.
  •  to give urgency to the proposed review of the Overseas Investment Act 2005 incorporating a robust programme for public submission as announced by the Prime Minister.
  • The moratorium on the sale of sensitive agricultural land remains until the review of the Act has been completed.

This is a direct attack on property rights and farm values.

What do they mean by “our” farms anyway?  The only farms which might be considered “ours”  are those owned by Landcorp.

The rest aren’t “ours”. They are the property of the many individuals, trusts, companies and other bodies who have purchased the land.

Excluding foreign buyers would have an immediate and negative impact on the price of farmland. Other would-be purchasers might enjoy that but would-be sellers and the hundreds of other land owners whose farms’ values would plummet, and their creditors, would not.

What makes farms special or different from commercial or residential property, businesses and companies that all foreigners should be prevented from buying it?

Around 80% of our forestry is foreign-owned as are many other companies operating here including several vineyards and wineries and hotel chains. A Chinese company has a big stake in PGG Wrightson which gives them access to PGW’s intellectual property in seed development.

Most of our banks are foreign owned and their policies and operations impact on the day to day life of New Zealanders directly in a way that farms do not.

The Overseas Investment Act  already requires vetting of would-be purchasers of more than 5 hectares of non-urban land.

Regardless of who the owners are they can’t take the land with them and are subject to the same laws and regulations governing what they can do with it as everyone else.

Bernard Hickey says SOF’s is a myopic, xenophobic campiagn which needs debating.

I agree with his adjectives and think a discussion on the facts would be helpful. It could start with a KPMG report which found:

  • There is no evidence that New Zealand is experiencing an unusually high level of foreign investment in agricultural assets.
  • No justification for significant changes to the overseas investment rules . . .
  • KPMG’s Head of Agribusiness, Ian Proudfoot says: 

    “As a small, developed economy New Zealand has always required inbound investment to support the standards of living we are now accustomed to, and this holds true even in the current environment. The agricultural sector in particular lacks sufficient equity to take advantage of the opportunities available to it and foreign investment offers the potential for us to maximise the value of our land. Events of the last year have demonstrated we are not always able or prepared to finance these opportunities from our own resources.

     “The high price of quality agricultural land in New Zealand and our remoteness to the rest of world means that even with the natural benefits of water and the link product has to New Zealand’s sustainable brand we are unlikely to be top of the list of preferred destinations for most international land investors currently looking for opportunities,” says Mr Proudfoot.

    In other words there is no need for SoF’s campaign because in spite of perceptions to the contrary, New Zealand farmland isn’t particularly attractive to foreign investors.

    Given that and our need for capital, those who want to come here should not be discouraged without good reason and not being citizens is not by itself a good reason.

     It is better for farming and New Zealand to allow, or not, sales of farm land to foreigners on a case by case basis than to cut off the investment and ideas which can mean foreign owners give far more to New Zealand than they take.

    The threat of foreign ownership is a perception, the threat to farms and their owners from a blanket ban on foreign ownership is real.

    Ban wrong response to concerns over foreign ownership


    The Green Party’s members bill seeking to ban overseas investment in New Zealand land over five hectares is the wrong response to concerns over foreign ownership.

    The media release says:

    Today Dr Norman released a Member’s Bill that would effectively stop the purchase of New Zealand’s productive dairy industry by restricting the sale of farmland over five hectares to overseas investors.

    I think that should read restricting the sale of farmland over five hectares to New Zealanders because the Bill says:

    4 Purpose

    The purpose of this Act is to: prevent foreign ownership of sensitive land.

     5 Sections 16 and 17 deleted and replaced

    Sections 16 and 17 of the principal act are deleted and replaced with

    16 No overseas investment in sensitive land

    No consent can be granted for overseas investment in sensitive land.”

    This is  a knee-jerk reaction to concerns over the purchase of the Crafar farms by Chinese investors. 

    If there is a problem with overseas investment in our land, this Bill isn’t the solution.

    Not all land over 5 hectares is sensitive, nor is it all farmland.

     New Zealanders’ lack of wealth in comparison to that of people  from some other countries could make us vulnerable but overseas investment can have benefits too.

    It’s not just who owns land but what they do with it, and its produce, which matters and most of that is controlled by local authority regulations and central government laws.

    A blanket ban on land sales over five hectares is an overreaction to what, at least at this stage, is a problem of perception rather than reality.

    We need to have a discussion on the benefits and risks of foreign ownership and if there is a need for legislation it should be based on facts not emotion as this Bill is.

    Another question about farm ownership


    The question of whether or not foreigners should be able to buy farmland and if so what conditions might be imposed on them is exercising many minds.

    But there is another question which is at least as important: why can’t New Zealanders afford the prices that people from overseas can pay for our farms?

    Immigrants welcome but can’t buy land


    The Green Party policy welcomes immigrants but its economic policy  wants to stop them from buying land.

    If someone from overseas buys land here they will almost certainly do it with foreign currency which is of benefit to our economy and it’s not who owns the land but what they do with it that matters.

    Panelists at a farm forum I attended in July – two farmers, an accountant and a farm advisor, – were adamant that foreign investment in land was a good thing.

    It boosted prices so vendors recieved more for their properties which they were able to reinvest elsewhere in the economy.

    The new owners farmed the land so that they and/or their staff became part of the community contributing not just economically but socially too. If they chose not to keep the farm, it  was put on the market and available for another purchaser from New Zealand or elsewhere because no matter who owns it, they can’t take land away.

    What people do with land is a matter for local and central governments through district and regional plans and the Resource Management Act. Foreign owners already have to satisfy the Overseas Invesment Commission before they buy farmland and that is a sufficient hurdle to ownership.

    The Visible Hand in Economics also has questions about restricting land ownership to New Zealanders.

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