Crafar farms receiver accepts new Chinese OIO dependent offer after UBNZ withdraws

I'm sorry to the pro international movement but I don't agree with foreign ownership of NZ land mainly because as mentioned in the article it creates land inflation.

The follow on effect is that banks can then lend against the new international property values to everybody, so farms land values become unaffordable to the people who the land is supposed to protect and the underlying value - the productivity, either that be beef or kiwi fruit doesn't change so farms become less economically sustainable.

When it becomes too expensive for Kiwis to live in New Zealand, we could all be relocated to Tuvalu and Kiribati.

Well put Roady and I agree wholeheartedly. This offer scares me, because it seems more real than the last. I dont want the district going to chinese hands, and I dont give a rats arse who says I am racist, I wouldnt want it going to arab or english or american either.  It should be a requirement that if you buy land you  pull the tits yourself.  That would quickly extract the men from the boys.

Reckless farm management no way, its never looked so good up there. Of course we have had drought after drought, and that wouldnt help production, however despite the weather the cows are in good nick, the grass is away with the last flood of rain. Mr Crafar wouldnt recognise this part of his ex empire, it all looks too well managed.

It now makes sense why Pansy Wong resigned.  She is going to wait a few years until the Chinese own the majority of NZ in the form of houses, farms, businesses (e.g F&P, PGGW etc).  She will then be appointed as the leader of NZ by the Chinese Govt.  Probably May Wang will be her deputy.

However I don't blame the Chinese for what is happening.  It is the undeniable fault of the stupid and economically short sighted NZ Govt, farmers, land and property owners who are really to blame.  I am intending to learn to speak Mandarin as it will come in useful when dealing with the new owners of NZ Inc.

You are dead right Andy, idiots like the Crafars borrowed through greed, and now the whole of NZ is paying. Government sat by and allowed this all to happen. We will be the serfs and slaves of the south pacific now. I have been angry about this unfolding for years, as I watched small family farms become behemoths farmed by young people similar to the serfs of old england. Our forefathers ditched england etc to get a better life and look what we have done.

This is not going to end well....!

Memo to Messrs Hickey, Vaughan, Chaston

Here is a serious suggestion for you all at interest.co.nz to consider .. be original .. get out from behind your keyboards for a couple of days and go and interview a half-dozen old-timers, third or fourth generation aucklanders who grew up there, and have been pushed out, sold-up, and moved to less over-crowded places, slower-paced places, and ask them why, what happened. Ask them what has happened to auckland or nz, and whether they or their offspring like it. For a lot of people, auckland has become a safe-haven from the Sitiveni Rambuka coups (ethnic cleansing) and the Frank Bainimarama coups (ethnic cleansing) and the when sovereignty over hong kong reverted to chinese control, the huge inbound suitcases full of cash into new zealand .. has turned many auckland suburbs into enclaves ... walk up many of the CBD streets and you have to know mandarin to read the lettering in the windows of the shops ..

I don't understand why foreign ownership of farms is any worse than foreign ownership of banks, utilities, forests, hotels, or any other business. Nor do I understand why it is important what nationality the potential new owners might be.

It's a global world-wide market and you can't insulate yourself from it, unless you live in North Korea :-)

Simon read what you wrote and you will get my gist. We are selling off everything.... its all bad. This new global world is nothing other than mega corps and mega rich holding and owning everything while the rest of us slave to keep them happy. Whats so different from the kings and queens of old. However the tide is turning, aka riots. Capitalism was never meant to be like this.

Whats wrong with foreign ownership?

Two things spring to mind immediately

(a) Transfer pricing - the local taxing authorities are almost powerless

(b) A recent example is a bit more obscure but more sinister:-

The (elected) AU Federal government proposed a Resource Rent Tax on non-renewable resources. The 3 largest and dominant players, RIO, BHP and XTRATA are foreign owned and controlled. They objected violently to the tax. Threatened to take their business elsewhere to more friendly countries. The 3 CEOs (who are unelected) flew into Canberra, got a seat at the table in private discussions with the PM. Flew out. The proposed tax was canned.

The problem here is that locals couldn't compete with foreigners. Why the farms could not be sold locally is the question begging to be answered.

The banks lent to individual farmers until they became basically large scale corporates. Then when they  inevitably  go broke the banks refuse to break them up and sell as corporate farms to foreign buyers at prices that locals wouldn't pay because either the banks wouldn't lend them the money or they couldn't get a good enough return but more than likely both.

Yip..Maleme St Greerton, Pretty much ready to go..capable of processing 250,000lt of fresh milk/day

The hypocrisy of a Government that on one hand tells us we need to keep control of our assets and only sell %49 of SOEs and turn around and let the banks sell the very land we stand on.

 These farms have a market value, its just not a value the banks are happy with. I know there are farmers out there who are willing to bid on these farms and buy them at  fair market value. This is a bail out of the banks who showed incompetence in their lending and now get a get out of jail card.  Production wont increase there is little value to NZ selling these farms to a corporation with funding from a sovereign government.

  I see little or no benefit to NZ from selling these properties offshore. Are we expecting increased production? Maybe the Chinese will build a milk factory that would then compete with our on CO-OP, its a daft idea anyway I look at it except as a backhanded banker bailout.

Yip, a bank bailout. With a bunch of nz farm advisors hanging on to the coat tails of the chinese, egging them on.

Can the Chinese own land in NZ and produce more efficiently than a NZ'r? Am I correct in saying most large scale operators (not farmers, they are farm owners despite what they may think) are not making acceptable operating returns on their investment? I'm assuming they'll need layers of management such as the set up with the Crafer farms at the moment which I doubt are paying their way as a result. Is securing food in the south pacific that important to foreign investors that they're happy to forgo a decent return on their investment? The message we receive from our co-op, banks et al. is that there is a threat from other countries with lower costs of production, hence the debate to access external capital so as to invest, retain market share, and grow with customers and so on and so forth. So if the Chinese want to make an investment in agriculture, wouldn’t they be better off in those places.

The Crafer farms have certainly improved since Allan was running the job, but they’re scattered far and wide, and there is a lot of room for improvement, maybe we should let the Chinese have them, and show us how to make a marginal situation work. I see the price of oil is going up; maybe their tankers will have hydrogen engines.

Let's remember that Chinese business cultures have been around for centuries; not decades like us. Therefore they view any major investment in the longterm...that being longer than a year, a decade or even a century.

NZ business has been around for a tad longer than decades and has managed to rape every resource available in that time. We scoff at Asia, their human rights, pollution and lack of concern for Mother Earth. What a load of crap....

We sit here proclaiming clean and green. Our only industry showing growth currently is the same one that destroys every waterway in our country. Why wouldn't Asia jump on the bandwagon. It may be their opportunity to reduce polution of rivers in their own country.

Interesting comments Omnologo :-)

Chinese are long term strategic thinkers which is quite different from western business philiosophy.  I believe it is the land they want, not Fonterra per se, but they will happily see it destroyed if it is to their advantage.

It is going to be most interesting to see what the government does about DIRA milk in regards to processors who have their own suppliers and/or are solely exporting product. If they make it that Fonterra only has to supply it for domestic processors with no supply base, I will be interested to see what that does to Chinese interest in NZ dairy industry.  The Tauranga UHT plant is a good example.  If Fonterra didn't have to supply milk (especially at a government regulated price) to companies such as this, the plant would not have been built.  Mind you it hasn't yet started production and don't be surprised if it doesn't anytime soon.

It has been said by executives, that Fonterra's overseas JVs/investments will be contributing substantially more to payout than it's NZ operation in the future. 

I'm a dyed-in-the-wool believer in co-ops.  $9m wouldn't get me to change my mind on the way I supply. Having lived in provincial China I am well aware Chinese business ethics are very different and I would not want to be locked in to a long term supply contract with them. They are masters of appearing to pander to the western businessman's greed and then when you least expect it, extracting a very high price for such foolishness.

CO I too am a Fonterra shareholder and believe in co-operative principles and models as a way for producers to retain control and realise whatever value there is to have. However I'm nervous about the vision and agenda of Fonterra leadership. I feel the family farm that were the foundation of co-ops that created the industry that Fonterra has inherited have been superseded by large scale 'corporatised' principles as evidenced by the CAP process, voting tied to shareholding and a resulting shareholder apathy.

@Casual Observer and @OmnoLogo

I might be on a different tram compared to you guys but I see the issue thru diiferent eyes:

The following comment is from Anthony Sampsons book "The Seven Sisters" The History of Oil: In 1850 John D Rockefeller demonstrated that "owning" the distribution of oil was more powerful than "owning" the production of oil. (You would need to read the book itself to understand and appreciate how ruthless he was). More recently, the same lesson was played out again in 2006 in the dispute between Russia (producer) and Ukraine (distributor) over the means of distribution of Russian gas. Russia capitulated in one day. The same contest is being played out in the search engine wars now. It will be one small future step for those who control the means of distribution (brokers and Merchant Banks), to extract large fees from institutions who will be willing to pay to "see" where global money is going. The same business model is pursued as aggressively by the supermarkets chains (distribution) screwing the suppliers (producers).

Today in 2011 I see Fonterra pursuing the same "distribution model" with their suppliers at their ultimate mercy. Why would China want to own the means of production? When they have achieved sufficient penetration and scale and mass they will be able to squeeze the supplier down to $2.50/kg. The potential to take the $9 million and hand in the keys to the farm looks attractive to me. Some time in the future, when the price per kg is painfully low the $9m will look even more attractive, and when you capitulate they will pick up some very cheap farms. That's the way Rockefeller operated.

Doubt if you will read this in any of the text-books.

This is a company that for all intent and purposes is a vehicle for a sovereign nation (China) to purchase land in another nation. The Chinese Government will use political clout to make sure its investment is looked after. We dont want a Chinese frigate in Wellington making sure that it gets the ear of our Government, like whats happening in Vanuatu at present over fishing.

All I can say it, tenants in our own country, that's what we're heading to.

Read somewhere that the chinese group involved with Alan Crafars farms very involved in the Central Congo. The chinese investment in ag in Central Africa,99 year leases etc,on the premise the Chinese would enhance local people, employment, jobs etc etc all bs. They haven't employed local labour imported their own and the food goes out through Uganda and kenya to Mombassa port pass a few million starving people.

See ANZ going on Asian expansion opening Banks in Shanghai,Veitnam, Indonesia etc

Fonterra setting up dairies in China so I guess the Chinese think why not. The farms should be bought by Landcorp if they have to be sold and balloted out to young kiwis that want to have a crack , better for NZ in the long run. Despite what people think of Alan Crafar he produced a lot of income for NZ.

Fonterra change to corporate style of management noticeable when first tried to initiate capital restructuring and the more corporate it becomes the more disconnect with farmers

Shame that nz so broke we can't hang onto our means of production and distribution. an opportunity lost I believe.

Janette: Fonterra was 'invited' to set up more farms in China by the Chinese authorities.  I am not sure that they could refuse the invitation. 

I know a supplier who said they are only interested in the $ Fonterra puts in their bank every month.  THey are not at all interested in the politics of the company or voting on issues.  However they are the first to complain when a decision/outcome comes about that they don't agree with.  This is especially noticeable with the BB family farm, farmers.  There may be some disconnect with farmers, but I do not believe that it is all Fonterra's fault.  A round of farmer meetings start next week, lets see how many make the effort to attend.

The DIRA review that will happen this year will shape the future of the dairy industry, and Fonterra's future. 

Jannette,  the only people Crafers made money for were banks, and regional councils (and in their own dillusional heads, themselves). I don't understand how they made money for NZ. What would have made money for NZ was denying ego driven individuals such like Crafer the opportunity too be a vehical for banks to control significant landholdings, and instead having more people farming smaller units profitably and sustainably. This would have been possible if the 'Land Aggradation Act' wasn't repealed by Ruth Richardson and Roger Douglas, two individuals who appear to want to see NZ foreign controlled.

@ CO why is voting tied to shareholding? And what purpose does the CAP process serve? A prominent local farmer and perennial Fonterra champion (distinct from co-operative),  told me this is the way any corporate company operates, yet he would have been dead against a partial float as advocated by our board in 2007! Yes it’s up to us smaller family farm shareholders to hold Fonterra to account, but I believe appropriate leadership is needed to ensure we engage.

I recall rumors of share gaming from a board member(s) with significant shareholding in 2008, but Henry Van Der hayden maintained it was the drought that caused a run on capital and undermined the balance sheet. If this happened it reflects inadequate leadership, and shareholder apathy.

Interesting to see in the last Farmer Weekly the chairman of dairy Holdings claiming the company was performing well directed by good governance. If this is the case, I suppose it will look attractive to foreign investors; however I thought I read on this website that it was making significant operating losses?

Miraka, the powder plant majority owned by a couple of Maori Trusts is just down the road from us. They are offering 10 cents above Fonterras milk price, with conditions such as supply timeframes. For us the positives of supplying Fonterra as a co-op still outweigh any misgivings of Fonterras leadership and shareholder apathy, not to mention the financial incentive is simply not there.

It has galvanised local Fonterra shareholders into action against DIRA, after years of being fleeced by Wyatt Creech and co, and being apathetic. A couple of years ago when submissions were being asked on DIRA, Fonterra had a meeting in Hamilton with MAF staff (amongst other charismatic dignitaries) outlining the justification and role of DIRA. When I tried to protest the logic for DIRA the chairmen of the meeting (now deputy chair of shareholders council) tried to shut down the debate by claiming,’ we weren’t there to debate DIRA’. I couldn’t understand why Fonterra (shareholders and all) weren’t applying a blowtorch to officials and politicians to justify DIRA, and this was a couple of years ago. I blame poor leadership.

OMO, I was referring to production therefore export value. I agree in part about the corporate style that encouraged aggregation of land, at the time a 200 cow farm deemed to be uneconomic. Alan Crafer wasn't the only one, plenty all over the country. i guess if you have a passion for something and you believe your Bank is a "business partner" then you have a go. The goal posts are shifted and it all falls apart which is what has happened for many farmers.

I just personally think we should't be selling our productive base ie land .We always look for short term gain in this country and behave in a reactive manner when trying to find solutions. Maybe that is a reflection of our immaturity as a country, the she'll be right mentality. Don't know.

Considering stock and staff wastage verse milk production, Crafer cost the country big time. Agree that there are more from his stable.