Foreign ownership boosts wages:

September 5, 2014

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

August 18, 2014

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.  . .

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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

August 16, 2014

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

The latest Stuff.co.nz/Ipsos 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

December 6, 2013

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

October 5, 2013

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

May 19, 2013

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?

August 16, 2012

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:


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