Sunday, May 23, 2010

Selling the farms is selling our birthright.

Updated

Yesterday was a good day for New Zealand with an excellent step in the right direction in the form of the budget. Today is a very sad day. I know that I should believe the Crafar sale is simply open cross border investment. Having spoken to my 84 year old mother we share the same view. By selling prime dairy farms we are selling our birthright. Somehow when forestry land was sold to the Japanese trading houses in the eighties and nineties it did not seem the same. They still own a big chunk of New Zealand but that seems acceptable. Try buying Japanese rice growing land and see how far you get.

I don't agree with Adolf. When you sell the farms you sell the rights to shares in the downstream production. Every farm has a share in Fonterra. I could not give a rats bottom who owns the airports, they are services, but the farms are the core of our heritage and the core of what it means to be a New Zealander. When they go to the Chinese they will not come back. Try going to China to invest as a foreigner in Chinese land and see how far you get.

Asian investors are busy buying agricultural land in Africa where they send their people to manage their investments and the locals become simply tenants. Is that really what New Zealand has descended to? That is the destiny for the next generations? Have we really squandered the heritage of those who broke the bush, planted grass and grew such magnificent farms?

In my view the Overseas Investment Office should review the decision on the basis of Chinese law. If New Zealand corporates are entitled to go to China and buy significant chunks of productive rice growing land in prime areas then they should consider letting the sale go through. If the rules are not the same for foreigners in China as they are for foreigners in New Zealand then we should reject the deal and preserve our birthright.

Otherwise we will never get it back.

UPDATE: Anon in the comments points out that Fonterra is in fact investing in farms in China so I take back the point about OIO getting involved and take some well deserved hits on the chin for suggesting government get involved. If you believe we are competing on an equal international playing field then you are naive, but that was not really the point of the post anyway.

The point of the post was to express sorrow at the fact that New Zealand has over consumed since the fifties to the point where we are becoming tenant farmers from a position close to the wealthiest in the world per capita.

The word "birthright" did give an impression of "right". My family has owned farms in this country for generations. Our extended family still own farms but not in the immediate family. I don't believe that a property owner should be forced to sell to a lower bidder but simply rue the situation where our strongest strategic asset is being diluted by overseas ownership.

21 comments:

The Veteran said...

errrrrrrrrrr ... how do you take a farm to China.

Adolf Fiinkensein said...

Sagey, the Chinks would have to buy a hell of a lot of farms to have sufficient shares to command a controlling position in Fonterra.

I say let them come and buy the farms and the shares and when we think they have brought in enough capital, nationalise the buggers!

That's what they'd do.

Anonymous said...

Fonterra directly own farms in china...

http://www.fonterra.com/wps/wcm/connect/fonterracom/fonterra.com/our+business/news/media+releases/fonterra+to+invest+in+two+more+farms+in+china

insider

thedeityformerlyknownasnigel6888 said...

so other than the fact you are completely wrong about being able to buy farms in China, and are talking bollocks, everything you say is fine.

grow up for god's sake. NZ was built on foreign investment - because we are too damn cheap to save up and build our own assets. See the fishing industry - built on Japanese capital, meat industry, built on British capital. etc etc. Hell, your mortgage is funded by Belgian dentists and Japanese pensioners.

But oh no the yellow peril are coming to steal our birthright. ooooh scary! How do we know its bad, Sagenz and his mum think so.

Remember, if you don't want to prove you're a dick, the delete key is your friend.

thedeityformerlyknownasnigel6888 said...

actually that was impolite, I do apologise Sagenz. You are wrong about the specific, but dead right about the underlying issue. NZs ONLY mechanism to pay for our standard of living is our farming system, particularly around dairy, and what we are seeing is other countries building us into THEIR strategies, rather than NZ companies taking the technology into market and owning a piece of someone elses future.

The problem is our lack of capital, and our incredibly shortsighted business community and government. So you are right to be uneasy about what is happening, but the problem isnt Chinese business people. Regrettably the problem is us.

Anonymous said...

The poster with the very long name is wrong when he/she/it claims you cannot purchase farmland in China. I work for a firm which settled the purchase of a sizable farm, farm buildings and stock on Friday 30th April 2010. It was evidently a straightforward process.

I am incredulous that a non-owner of a NZ farm can claim to be "losing a birthright" (whatever that is,) where the rightful owner freely sells a farm to a foreigner.

The use of "birthright" is a presumptuous expectation that we all share in the ownership of a property which happens to be in NZ. To me, the notion smells of Stalinesque filth!

Cadwallader.

PC said...

"We"? "Our"?

Search though I will through thew box under my bed labelled "My Birthright," I am unable to find any pieces of paper bearing title to any farms.

How about you?

Kevin said...

a poster somewhere who had rural valuation/business skills, indicated that many of the Crafar farms were overpriced and destined to be under-performers by their geography. Maybe 'undesirable farms?

Lou Taylor said...

I've said for years that we sell by the hectare and our grandchildren will buy by the square metre.

SMTTC is right in saying the problem is not theirs but ours.

Anonymous said...

Someone will bankrupt the wang woman soon and that rules her out.

barry said...

What a load of drivel. NZ was run by the Poms from late 1800 thru to about 1950 (the poms control all meat exports and most of the wool. They owned about 70% of the meat processing plants and export the meat in their own name. One of them (vesty) had exclusive rights on export of all NZ egg exports!)

Then came the Yanks - you know coke and Mc D's and Levi etc, etc. The yankls own most of NZ plastic packaging industry, they own most of telecom, the Yanks own Lotsa NZ - but like the Poms, their time is coming to an end.

The chinese are now coming. Mind you they wouldnt need to come if we didnt have such stupid management in this country - like Norgate and his mates who took good NZ money and went and spent it in Uruguay - and lost it. Maybe they should have bought NZ farms and the money would have been safe.
Mind you i suppose they couldnt get bank loans - the banks had lent all their money to crafar - I mean - Jeez - the banks kept lending him money when it was obvious that they couldnt ever pay it back.

So dont blame the chinese if our managers and banks are so stupid.

Just some random thoughts.

Blair said...

Hey commie, if you can't afford to make a better offer on the farm, stop whining about someone who can.

Basic economics dictates that when a foreigner buys something of ours, that's pure profit into our economy. That money then gets invested in something MORE PRODUCTIVE and brings in yet more money to this country.

A "birthright" is useless if you could be doing something better with the proceeds.

Anonymous said...

Unfortunately our 'birth right' doesn't extend to Fonterra providing us with cheap cheese.

I guess when there's an extra dollar to extracted from the kiwi consumer under the guise of market prices they have no qualms about screwing us when there is potential for competition is all yellow peril and birth right

The job aspect is largely irrelevant. Most of us live in cities with only a minority being farm labourers which isn't an occupation most of us sensibly aspire to.

Anonymous said...

lets face it, NZ needs another million workers to be able to pay for the Largesse that the govts keep profligating. Most NZers recognice that the Chinese are hard workers, diligent and enterprising. (sometimes their enterprising natures can lead to corner cutting and this coupled with a lack of morals in some of their leaders due to their communist oppression of historical "unenlightened" things like ethics which some religeons revere, ultimately leads to their disasters like the Melamine poisoning).
Should NZ allow immigration of people who have nothing to offer but another handout requesting more of a free ride, or people who actiually want to improve their lot through effort, risk, and thus reap the rewards?
As has be shown many times before success breeds success, and to import people who would be willing to increase the sorely lacking productive side of NZ's economy can only benefit the nation as a whole.

Mort

Anonymous said...

Good idea about importing chinese workers. Allow them no access to social services and after 5 years they can have full citizenship.

It should also get rid of our treaty of waitangi issues by importing large numbers of people who really don't give a fuck.

Anonymous said...

Once one has a dairy farm one is entitled get shares in Fonterra. With a recent change in Fonterra rule one can then buy additional Fonterra shares. Why worry about 'shipping farms to China', all the Fonterra production/exports can be owned by China ...

Adolf Fiinkensein said...

Anon, please do try to get some semblance of the facts right.

I think you'll find (but I'm not entirely sure) that during the purchase process you can apply for a contract to supply and if you measure up you will be granted one. That certainly is the case vis s vis conversions. It is quite possible to buy a dairy farm without also buying Fonterra shares. If Chinese immigrants - just like any other immigrants - do buy and operate a farm if their practices are not up to scratch they'll pretty soon be rubbed out by way of financial penalties - just like all other suppliers.

Second, there are sufficient controls and restrictions around the purchase of 'extra' shares currently to ensure the scenario to which you allude could not come to pass.

Anonymous said...

"...many of the Crafar farms were overpriced and destined to be under-performers by their geography. Maybe 'undesirable farms?"

Most farms are overpriced, not just Crafer's.
Geography always affects a farm's performance. The Waikato has dry summers.
Good farmers can always improve a property's performance.
Desirability is in the eye of the beholder.

If the Chinese buy enough farms they can build their own processing factories. They will not need Fonterra. They can probably have Fonterra's share of the Chinese market, however.

Fonterra wants to move to shares being tradeable between farmers so that Fonterra will not have to buy back the shares from farms no longer supplying Fonterra.
That should fix the problem of overpriced farms.

David

Adolf Fiinkensein said...

David, you demonstrate a lamentable failure to understand value when you say:

"Most farms are overpriced, not just Crafer's. Geography always affects a farm's performance. "

They are not overpriced if someone buys them. The ones which are overpriced are those which do not sell because nobody will pay the asking price.

Perhaps what you really mean is that for this past fifty years or so farms have sold for more than their 'productive value' which is a reflection of the capitalised value of their net return before tax and before debt servicing.

What really has been happening is that the prospect of tax free capital gain has caused farmers to bid up the price of land well above its productive value. Hence the boast of many that 'we pay debt we don't pay tax.' That is a complicated way of saying they have been indulging in land speculation on a grand scale and it is a very great pity that English and Key failed to put a stop to it on May 20th.

Anonymous said...

Adolf..

Key and English failed to put a stop to much more than the sale of a few farms..

adam2314

Anonymous said...

"Perhaps what you really mean is that for this past fifty years or so farms have sold for more than their 'productive value' which is a reflection of the capitalised value of their net return before tax and before debt servicing.

What really has been happening is that the prospect of tax free capital gain has caused farmers to bid up the price of land well above its productive value. Hence the boast of many that 'we pay debt we don't pay tax.' That is a complicated way of saying they have been indulging in land speculation on a grand scale and it is a very great pity that English and Key failed to put a stop to it on May 20th."


Perhaps what you really mean is that most farms are overpriced.

But your eloquence trumps simplicity superbly.

David