The Government has approved a controversial bid by a Chinese company to purchase 16 dairy farms, originally owned by the Crafar family.
Land Information Minister Maurice Williamson and Associate Minister of Finance Dr Jonathan Coleman announced today they have accepted the recommendation of the Overseas Investment Office to grant consent to Milk New Zealand Holding Limited, a subsidiary of Shanghai Pengxin to buy the farms.
The bid is said to be worth some $210 million and will see the state-owned Landcorp running the farms.
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Williamson said the bid has met all the OIO criteria, including the "good character" test that previous bidder Natural Dairy, failed last year.
"These are people that are coming here to invest. They want to grow these farms. They're not coming here for some nefarious reason to buy the land and then let it turn to weeds," Williamson said.
Prime Minister John Key said the OIO interpreted the legislation correctly.
"And had they turned it down on the basis simply of being Chinese on their desk it would have been not only be unlawful but unacceptable," Key said.
Tight attention
The bid attracted a lot of controversy, with a protest group set up to oppose farm land sales to foreign owners.
The ministers said tight attention will be paid to the operation of the farms.
"Stringent conditions policed by the OIO will ensure that Milk New Zealand's investment delivers substantial and identifiable benefits to New Zealand," they said today.
Milk New Zealand will have to invest more than $14m into the farms making them more economically and environmentally sustainable, protect the Nga Herenga and the Te Ruaki pa sites and improve walking access to the Pureora Forest Park and Te Rere falls.
Shanghai Pengxin must also continue to be of good character and not acquire milk processing facilities unless unless they are already 50% or more New Zealand owned.
Another condition of the sale is that a joint venture company be formed which is 50% owned by the Chinese and 50% by Landcorp. The company will develop and manage the farms, with Landcorp providing operational services.
Share of costs
Chris Kelly of Landcorp said Pengxin and Landcorp will "share the milk cheque" from the farms on a monthly basis and will also share the costs.
Landcorp also said it will employ almost 90 people because of the joint venture.
Shanghai Pengxin are a conglomerate operating worldwide in
property, mining and agriculture.
Shanghai Pengxin spokesman Cedric Allan said the farms will be
upgraded, production will be increased and that will create jobs in
New Zealand.
"Pengxin is going to spend a lot of money in the area," he
said.
The receivers, KordaMentha's, accepted the Shanghai Pengxin bid in
late 2010, conditional on OIO approval which has taken nine months
to come through.
The receivers set a deadline of Tuesday next week for the offer to go unconditional.
Legal challenge
Well-known businessman, Sir Michael Fay led a consortium
including local iwi, that made an unsuccessful bid to buy the
farms for $171.5 million. They have
mounted a legal challenge to the sale .
"Back in September 2009, Finance Minister Bill English was
justifiably boasting about law changes he had achieved to allow
ministers to veto OIO recommendations for large-scale foreign
buyouts of New Zealand farmland, Fay said.
"That two ministers have failed to apply Mr English's laws properly makes a mockery of his boasts."
Another member of Fay's consortium, Hardie Peni of Tiroa E and Te Hape B Trusts, said "New Zealanders have been shafted" by today's ministerial decision.
"All public opinion polls have been overwhelmingly against the Shanghai Pengxin bid, with more than 80% of New Zealanders against the sale of large parcels of productive farm land to overseas buyers," he said.
"This is one issue where all Kiwis, Maori and Pakeha, urban and
rural, stand together."
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