When Foreign Ownership goes too far.
As Saturday’s Fairfax poll vividly illustrates, the firecracker issue of foreign ownership of our prime farm land transcends political persuasions. No reasonable-minded person wants to slam the door on foreign investment in the New Zealand economy. We simply have insufficient domestic capital, as the Christchurch rebuild, or the tourism sector, exemplifies. But there is a world of difference between economy-enhancing investment and subversive foreign ownership. The lightning rod of Lochinver underscores the imperative for New Zealand to take stock of just how much farm land has already fallen into foreign control. It’s a pretty shabby indictment that no one really seems to know. In the past week alone, news media reports have carried wildly variant estimates ranging from 1% to 15% of the nation’s arable land. The Abbot government in Australia is in the final stages of establishing an official farm ownership register, which will be rigorously monitored “ to safeguard Australia’s interests.” New Zealand should follow suit on farm land – and residential property, given it too is subject to the great and fevered unknown. But as Shanghai Pengxin sizes up Lochinver Station, Federated Farmers has emerged as the voice of reason, about New Zealand’s strategic interest. Just south of Christchurch, the Chinese giant recently seized control of 13 mid-Canterbury dairy farms, previously owned by Synlait. Lochinver would be their third major purchase in the three years, amplifying concerns Shanghai Pengxin is creating a formidable vertically integrated supply and manufacturing chain, with command and control of the entire process, from milk production and value-add processing, to supermarket sale. From the farms they own here, to the supermarkets they run back home, Shanghai Pengxin scoop all the loot generated along the way. Virtually every other major Chinese dairy firm ( Mengniu, Yashili, Yili and Wahaha) wants to leverage off New Zealand brand imagery, by owning processing facilities here, too. But under this model, how much value or profit accrues to local farmers, let alone NZ Inc? Where is the evidence such foreign owned and vertically integrated entities, deliver “a substantial and identifiable benefit” to our economy? Federated Farmers President , William Rolleston welcomes overseas investment and savvy joint ventures, but is profoundly perturbed by vertical ownership of both land and processing plant, by one foreign entity. Why should we allow foreign dairy corporates to compete against Fonterra, in our own backyard, and against our own dairy farmers, with the profits gushing offshore? Regardless of who prevails on September 20, the concerns are legitimate and the incoming government must act in the national interest.
Mike’s weekly current affairs column, as first published in The Press. August 19. http://www.press.co.nz