National to assist young farmers to buy Landcorp-owned farms; 'these farms are better off in the hands of hard working young farming families'

National has announced a plan to offload most of the farms currently owned by Landcorp.

It says about 100 of the 140 currently owned by the crown company will be made available on lease-to-buy arrangements for young farmers.

National's Primary Industries fact sheet can be read here.

This is the statement from National:

A National Government will help young families into their first farms by allowing young farmers to buy state owned farms after they’ve worked the land for five to ten years, Primary Industries spokesperson Nathan Guy says.

“The Government owns a large number of commercial farms through Landcorp, but there is no clear public good coming from Crown ownership and little financial return to taxpayers,” Mr Guy says.

“We think that some of these farms are better off in the hands of hard working young farming families who are committed to modern farming and environmental best practice.

“National will direct Landcorp to lease these farms to young farmers, and give them the opportunity to buy them at market rates when they have built up enough capital.

“Many farming families got their start through the old Land and Survey ballot process and we want to give that opportunity to more New Zealanders.

“This is a win-win policy that will help more young Kiwis into farming, and put taxpayer money from the sales towards things they care about,” Mr Guy says.

The farms will be awarded on a lease-to-buy arrangement, with leases awarded by a panel and ballot, and prioritised towards young farmers who have experience at running a farming operation, and have not already had sole ownership of one before.

The leasee will be required to work the farm continuously themselves for at least five years before being able to purchase it, or longer if they need more time to build up capital.

“National is committed to working with our farmers to tackle environmental challenges and to encourage sustainable farming practices to mitigate the impacts of farming on the environment,” Mr Guy says.

“We are making real progress, much of that driven by a new generation of young farmers. To build on that, farmers wanting to buy these Landcorp farms will have to demonstrate a commitment to sustainable farming methods, and outline their plans to continue to do so.”

Mr Guy says he expects around 100 young farming families to benefit from the programme.

“Not all of Landcorp’s around 140 farms will be sold. Many are subject to Treaty claims and others have a right-of-first-refusal for Iwi – and these rights will of course be respected. Some of Landcorp’s larger farms will be divided into smaller units more appropriate for first-time owners.

“We expect it will take over a decade to complete the sale and settlement process for the farms that are included in this programme. Any revenue generated by the sales will be reinvested in public services.

 “National will ensure we help more young families into farms. We are committed to working with our rural communities to ensure New Zealand continues to lead the world on sustainable farming,” Mr Guy says.


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50 Comments

why not give farm to young unemployed kiwi for free??

So they can let the land revert and grow dope and setup P labs in isolated areas - sounds a good plan!!! Hard to see to many couples getting the deposit together in five years, unless the "market value" is heavily discounted, and also difficult to see the young couples wanting to improve a farm to much before they can buy it at "market value". This plan will be best done as per land and survey days where the leaseholder owned the improvements and simply bought the land at unimproved value or its value on the day the lease started.

At least we now know it is the young unemployed who are setting up P labs. Thanks.

Already tried that in treaty of Waitangi settlement.

Why limit it to farms? Why not the state fund more business partnerships this way and assist citizens into business?

What really happened is that Landcorp went from 1800 odd cows in yr 2000 to 75,000 ten years later, lost the farm when dairy went tits up.
So off loading a loss making business makes sense, except they are stuck with all those pastoral leases where the money is really being lost. Taxpayers should be pissed.

50/50 sharemilking was good for Landcorp as owners. But they looked enviously at the sharemilkers and thought they were making way to much as have many farmowners. So they not only changed to managers and bought the cows they even went as far as 50/50 for on the old Crafars farms. They then suddenly discovered why sharemilkers were compensated so, there's a big risk factor involved in owning cows. Cows value fluctuates wildly and unlike land any capital gain is taxed.

Such a great point Aj.

Yes, and given we have to take the hit sometime I'm quite happy to see the relevant properties sold.

But they should be offered at a price that reflects a reasonable return on the productive value of the land - that productive value being set by taking into consideration the de-intensification/de-stocking needed (if any) in order to make the operation environmentally sustainable.

On that basis, taxpayers will take a potentially massive hit, but it will be to the advantage of the individual enterprise and set a model up for what our sustainable agricultural future looks like.

I'm all for it.

I could be wrong, but I think the dairy conversions north of Taupo revert back to the landowners with improvements after about 70 years. If that's the case, I can't see how the Government can sell them. There has been a lot of capital sunk into them and the rental is pretty high so it's probably been a poor deal. There are parallels with Solid Energy, ambitious plans with taxpayers money and not enough governance and oversight. And that's not even considering the environmental degradation and increase in greenhouse gas emissions, which taxpayers also have to pay for.

Pretty shocking decision making by Landcorp bosses. I think that was under the last labour govt. Like their sell out in the Taupo catchment.

Simon, they don't own the land so can't sell it nor any other land they lease and farm.

How many of the 140 farms in the article do they own ?

It does say '100 of the 140 currently owned' not '100 of the 140 currently managed' so I guess that's 140 they own.

National - running out of stuff to sell

Then why is the Crown balance sheet showing the highest value of assets ever, at over $300 bln as at the end of July 2017. If there really was "nothing left to sell" then surely Crown assets would be declining? But they are growing strongly, far faster than inflation.

And if "everthing has been sold to foreigners", then why do the National Accounts show foreign holdings as slipping and NZ ownership as growing? Our NIIP/GDP ratio is (-58%) the lowest it has been since 2009 (when it was -82%). By any measure, NZ is actually 'buying back the farm' and not selling it. This is a huge move in the right direction.

The meme that we are selling everything is just urban myth, just not true.

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Although the majority of the growth in the balance sheet is due to the re-valuation of property assets

No it is not. Crown revaluations are mostly related to NZ Super Fund and ACC Investment portfolios. Those amount in total to only about 15% of total Crown assets, and the mark-to-market value changes are far less than that. There may be land revaluations in there (LandCorp?) but they are very minor.

Do you know whether we value (and revalue) the conservation estate? And what about the state highway network?

I think I recall KCDC recently revalued the land under their local roads and the land values went up significantly, such that the depreciation costs on the new valuations increased significantly.

David - out of interest, what makes up the other 85% of Crown assets?

clueless comment - you might have noticed your house price has gone up.....

House prices have very little to do with Crown asset values. Maybe some in HNZC, but that is very little of the $300 bln.

Don't forget Landcorp, David - and now that the asset values on the books are so wildly inflated as to be ridiculous whilst the assets themselves are making losses - National want to sell them off at these inflated values (I assume) to first time ownership young farmers.

In other words, transfer the government debt and the losses to young NZers. Charming.

Landcorp existed of late to purchase and keep land prices in the sector inflated beyond the productive value of the land as a means to generate more foreign direct investment - they repeatedly outbid these young farmers again and again over a period of many years.

Kate, the problem today is how to navigate our way through the new 'globalised' world. Markets are adapting, the USA is doing a lot more exporting. Russia is now a big producer, Brazil is still growing fast, production up %26 last year, %16 this year, those are big numbers from a huge producer.

I don't think we can ever compete on bulk, and I think Asian markets are going to be harder to negotiate deals with on a commodity basis. So we need to get back to producing what people want, what they are prepared to pay a premium for, thats going to require less chemicals and less intensity. It's also going to work better for those with lower debt.

I don't know what Asia needs, information flows quickly so whats good today could be oversupplied in a year. Farming systems take time to set up and can be hard slow to adapt to new realities.

Landcorp was set up to help young farmers onto land but cheaper land prices would be better for all wanting to enter the business.

Tax changes should be made to better reflect innovation and creativity in exports etc, over speculation in non productive sectors. I believe it should be tax neutral, so I may pay 30k more in a land tax but 30k less in income tax so the incentive is to make money not to sit on expensive assets.

Agree with all that, Aj. There is a future in protein, but not in bulk commodities and that is true for dairy perhaps even more so than meat, I'm guessing.

And yes, how that food is produced will really matter. Did you see this article, for example;

https://www.stuff.co.nz/business/95595998/NZs-apple-and-pear-industry-go...

I'd say we could be on the radar of EU markets on our environmental record next. And our continued use of 1080 can't be of assistance either. But you'd have a better feel for that.

You know me, I've always had an interest in nuts :-)! And of course, California (biggest supplier of almonds by far) and Australia - major players in these niche nut markets - are running out of water! Surely we should be working on developing tree hybrids suited to our conditions? And then go on a mission with plant subsidies, like we did with radiata pine, to convert vast tracks of current grazing land into nut farms. Similarly, the government would need to work with industry to set up the processing facilities.

But who knows - maybe the next new thing isn't nuts, but sure as hell we need to find a next new thing, as we're presently a banana republic, only the product is milk powder.

Kate, I sat around a table in the UK, one of the daughters had just got back from Indonesia, so we drifted onto palm oil and palm kernel extract for animal feed and damage to rain forests. They mentioned NZ as a contributor to the problem, buying millions of tonnes of extract, next thing I'm getting a hard time about NZ farming practices, too much dairy and pushing land too hard, irrigation policy etc, didn't see that one coming, young people are well informed on social media these days.

Yes they are and it's wonderful. It's a big reason why in this NZ election I hope we hand the baton onto that younger generation via Jacinda. It's the generation of my kids as well. Time they had one of theirs in charge - it will be good for their morale.

Aren't nuts huge consumer of water?
Nothing wrong with the many types of milk powder and other products NZ dairy industry manufactures - made for a multitude of uses as needed by customers around the globe.
80% of what Fonterra makes adds value above the base GDT auction price. So this myth about it all being commodity is largely untrue these days.
NZ does added value dairy at scale. Always striving to move further up the value chain but the scale, customer focus and global impact of what we already doing is something to be proud of.
Yes, need to sort stuff around water (already big progress in some regions but needs more) but lets not forget farming's impact on NZ environ started 200 years ago and laid the foundation for all our collective wealth as a nation. So we are all in this together.
Lets not throw the wholemilk powder out with the bath water..: :)

but its everything to do with MONEY PRINTING!
Which you might have noticed is pushing stock prices to record highs based on flat growth.
So National are selling REAL estate and you are claiming it as a success because some piece of paper says their stocks have gone up...

There needs to be a condition attached to this saying that it will be illegal for these farms to ever be sold into foreign hands. Without this many of these farms will just eventually be sold to offshore owners. Who own's NZ?

More farming subsidies from the free market party

Just reintroduce SMP's

Has anyone asked where this money's coming from? There's a lot of lollies they're proposing to pay for, plus a tax cut.

What money? The govt isn't giving the young farmer any money - they will be paying a lease and then purchasing the farm.

A great wise and balanced decision .... I think it will be well received - that is what Increasing Productivity is about .... and you would have thought that numb Lazy Labour should have come up with this IDEA as it is presumably more in line with their ideology

I wouldn't trust national to do half the things they're promising. You would think most people would see threw this hype . Why don't they just offer every man and women a million dollars cash a week after the election and be done with it. That'll get them in

By the same token why not offer the same deal to statehouse tenants? - Doesn't suit their property investment mates and foreign investors.

Young farmers can't use their kiwisaver funds to buy their first farm (which is also often their first home). Neither can they access any Home Start grant for farm ownership. Statehouse tenants - many of whom are in employment can, so in effect can get a govt subsidy of up to $10-20k live in it for 6mths and then flick it off.

That isn't fair - the Home Start grant ought to be available no matter whether you purchase a farm home, a lifestyle block home or a residential home as your first home purchase. And that said, why not also extend it to a marina berth and a live-aboard boat. A forward thinking government should understand that the shape and location of everyone's first home can be wildly different.

It's really sad to see this election turn into a battle between rural and urban NZ. This is not good for our country.

How long before China owns everything. Next year National will bring in our new flag

Great, so then they can be sold to offshore interests.

First home buyers can receive govt grants to buy a home, keep it for 6mths then sell it off to offshore buyers. What's the difference other than the farmer is bonded to the farm for 10 years?

2016 - "Landcorp is not for sale" http://www.stuff.co.nz/business/farming/agribusiness/80111541/Landcorp-a...

2017 - 71% of Landcorp is for sale

How would an interested young farmer get his hands on one of these leases? Asking for a friend.

Vote National for a start....

I am wondering the same. Most of the blocks are large. Back in the day of Lands and Survey they carved them up into 600 acre blocks or thereabouts for sheep and beef farming. Every block had a new woolshed sheepyards and cattle yards and a house. Nowadays it will be a cowshed and effluent pond and 4 houses. Interesring times

I would expect it could be towards the end of the next term before any came available - especially as they said they would cut some of the larger ones up. But it could be a Labour government after 23 Sept which makes it all a bit of a moot point really.

Weren't we thinking some were to fund settlements?

Yes and they still say that some will be excluded for that - perhaps that's why there's only 100 of the 140 they own.