Pure 100 Farm Limited, a local subsidiary of Shanghai Pengxin Group has signed an agreement to buy Lochinver Station between Napier and Taupo.
The Central Plateau farm acquisition is now before the Overseas Investment Office (OIO) and will then go through the Chinese regulatory approval process prior to settlement.
The Group currently owns 16 farms in the North Island and has significantly enhanced these assets. According to a Land Information New Zealand report, PNZFGL (another local subsidiary) has been instrumental in the re-development and improvement of the North Island farm properties it owns.
The Group plans to secure operational synergies over time with this planned farm acquisition and some of its neighbouring North Island farms.
In March this year, the Group secured a 74 per cent stake in 13 farms in the South Island and has committed to capital improvements and implementing innovative industry concepts.
The Shanghai Pengxin philosophy is to work co-operatively through its local subsidiaries within the New Zealand farming industry and support new investment and innovative opportunities, as well as productivity enhancement, sustainable farming practices, and building supply chain capability.
It didn’t take long for the usual suspects to get agitated about foreigners buying land.
Lisa Owen started the interview with Steven Joyce and Grant Robertson on the topic:
Lisa Owen: . . . I want to start with you, Mr Joyce. Ownership of assets is what makes you wealthy. So what do you think of this 18,000 hectare Lochinver Station being sold to foreigners?
Steven Joyce: What I think it it’s election time because we’re getting a sale of land, and therefore a couple of people now – it used to be just Winston; now it’s Colin Craig as well – beating the anti-foreigners drum, and I suspect we’ll see a bit more of this between now and election day. But it’s as regular as every three years that this comes up.
Grant Robertson, it’s just electioneering?
Grant Roberston: Well, no. I mean, New Zealanders are actually sick of our assets being sold off, and it’s the same for farms as it is for Steven selling off energy companies. We want to see value held by New Zealanders. We don’t get this land back once it’s sold. It’s gone.
Joyce: Well, actually you do.
Robertson: Well, no, we don’t.
Joyce: No, you do.
Robertson: And it’s New Zealanders who need to have jobs being created from assets that we own. Our message for foreign investors is if you want to come into New Zealand, help create jobs.
Joyce: That’s right.
It is right, that is one of the criteria the Overseas Investment Office must take into consideration when approving a purchase of land by foreigners.
Roberston: Build a processing plant. But we don’t want to sell off the land like this.
Mr Joyce, this is—
Joyce: Well, actually, I need to answer that, because, actually, I mean, Grant, you’re interesting there, because I haven’t seen you out protesting James Cameron’s land purchases in the Wairarapa, so I’m assuming it’s only Chinese investors.
Robertson: No, it’s not. The allegation is just wrong, Steven.
Joyce: When did you go out and oppose purchasing James Cameron?
Roberston: We’ve never opposed foreign investment that is not productive for year.
Mr Joyce, can we–?
Joyce: Give me a chance. When did you go out and actually oppose the last purchase of James Cameron’s land? Where’s the press release on that?
Robertson: We have been opposing the purchases of dairy farms by anyone, and wherever they’re from, if it’s strategic land like this—
Joyce: But this isn’t a dairy farm. You know that, don’t you? This isn’t a dairy farm. . .
Robertson: That’s right. But this is about what New Zealanders want, and New Zealanders what to control their own land.
What he’s saying is that people want to control other people’s land. this land isn’t owned by New Zealanders in general it’s owned by individuals.
Joyce: So this is not a dairy farm and this is not James Cameron, therefore you’re opposing it?
Mr Joyce, I just want to ask you about your own leader’s comments.
Joyce: He’s against Chinese investment.
Robertson: Oh, for goodness sake, Steven.
Joyce: Little xenophobia from the Labour Party to start the day off.
Robertson: See, this is typical of the personal politics. He doesn’t want to debate what New Zealanders want, which is to control their own future. Steven’s happy to sell off our future rather than have New Zealanders in control.
Mr Joyce. Can I ask a question please, gentlemen?
Your own leader has said that he doesn’t want us becoming tenants in our own country, but isn’t this exactly what is happening under your watch?
Joyce: No, it’s not. No, look, it’s a tiny amount. It’s actually a ridiculously small amount of land than under Labour, because, actually, under Labour, the average over the last five years they were in office, 90,000 hectares a year were sold to offshore purchasers. Under National, it’s been an average of 39,000 hectares a year. So it’s ridiculous for Labour to turn around—
So that’s the point, isn’t it? More under Labour, more under National. The pie being sold off is even bigger.
Joyce: But let’s look at the real benefit of international investment, actually, because, I think, all this hysteria which Grant’s trying to stoke this morning is actually incorrect, because there’s plenty of fantastic examples of international investment in this country which has brought real benefit. For example, Whirinaki, the big forestry processer in Hawke’s Bay, owned by OG for 43 years. The investment, it hasn’t had much—
So are you happy, Mr Joyce, that an enormous amount of productive New Zealand land is going offshore?
Land, productive or not can’t go offshore regardless of who owns it.
If foreigners own it some of the profit will go overseas but only after the owners have paid all the costs of running and improving the farm and also paid tax.
Robertson: Are you going to guarantee, Steven, that when this farm is sold off, this estate is sold off, that there will be some kind of added jobs? There will be processing coming and there will be something in the economy for New Zealanders? Rather than just selling off our—
Joyce: That’s one of the criteria that we put in in 2010, so absolutely.
Robertson: And you have not stuck to that.
Joyce: We have absolutely stuck to that.
Gentlemen, excuse me. We’ve spoken to sources at Tuwharetoa and other iwi who said this farm was outside of their price bracket. $70 million. So I’m interested to know where are the New Zealanders who are wealthy enough to buy our own assets? Isn’t that part of the problem?
Joyce: Well, actually, there’s plenty of New Zealanders that are wealthy enough to buy our own assets, but, look, the point of view is international investment is very important to New Zealand. It’s been very important all the way through, and it’s important to our future. And there are plenty of examples. I was actually at one the other day. Frucor, which is now owned by Suntory, a Japanese company, and they’re making big investments in their processing plant, and all the workers are in favour of that. Now, if you take the example of this particular company, Shanghai Pengxin, they have made investments in the older Crafar farms. Nobody, I think, is arguing that the Crafar farms used to be well-run. My understanding is there’s been some good investments out of that and more investments expected. So that’s all good stuff. There has to be a benefit to New Zealand—
Robertson: What Steven fails to understand here is that New Zealanders are completely sick of seeing their land sold off. This is about our lands and our future. Steven, the thing is we have learned our lesson.
I want to ask you—Mr Robertson, the Labour Party—No, no, let me—
Robertson: Steven Joyce refuses to learn the lesson that New Zealanders want land retained in New Zealand ownership.
Labour plans to stop foreign purchases. People who are not living in New Zealand, under Labour, would only be allowed to buy up to 5 hectares of land. So, would you stop the sale of this farm?
Robertson: Our criteria would definitely mean that a sale like this would be highly unlikely, unless—
Highly unlikely isn’t a no, it’s another yeah-nah answer from Labour which knows there are benefits from foreign ownership, which is why it allowed sales to go through when it was last in power.
Paul Walker makes some good points on this issue:
For efficiency reasons we want resources to be in the hands of those who value them most highly and the way to do that is sell them to the highest bidder. We want land (and other resources) to be used in the most efficient manner and the country of origin of the buyer is irrelevant to this. A thought experiment: ask yourself, Why are auctions used for so many goods? Its a way of finding out who values the good most highly. Whoever bids the most gets the goods. This is how we maximise the probability of getting an efficient allocation of resources. Secondly would a Labour government compensate the seller of the land for their policy? Under the Labour policy the seller would be forced to sell their land at a lower price than they would otherwise get (or not sell at all) and would a Labour government make up the difference between the actual sale price and the highest possible price? And if not, Why should the seller receive a lower return than they otherwise would?. And if this is a good policy for land why not implement it for other goods as well? What makes this idea land specific?
What makes land specific is emotion.
When PGG Whritghtson was purchased by a Chinese company no-one made a fuss about that yet the intellectual property that went with it in seed development may well have been more valuable than thousands of hectares of land.
But most of the fuss over foreign ownership of land is emotional.
It doesn’t take into account the benefits to the sellers and the country nor is it based on complete understanding of the area involved.
The issue is a hot-button one and should be debated.
But the debate should be on the big picture of how much land in foreign ownership is acceptable and any policy changes needed to ensure that. It shouldn’t be based on individual purchases, especially when it looks like at least some of the opposition is based on xenophobia.