Wednesday, August 6, 2014

Lochinver Station, a Perspective.

The lands around Lake Taupo are almost all covered with a thick layer of volcanic ash, a sterile impoverished erosion prone cover that can grow bugger all without serious additions of minerals, nutrients and subsequent soil improvements from creation of organic matter.
Image result for lochinver station/images
Possibly one of the most graphic illustrations of that is on Highway 47 from National Park to Turangi when parts of the Turangi end pass along the lea of hills that shielded the land from the massive dump of ash 1800 years ago when Taupo volcano last erupted
The land facing the lake before human intervention grew snow tussock and scrub while the south facing slopes protected from the ash fall are clad with magnificent big tree forest.

In the mid 1950s a major player in quarry and construction in Auckland, purchased a vast tract of the bleakest of country on the Rangataiki Plains and with the drive from a successful family business, the financial resources generated and the massive plant and machinery at times not in use in Auckland building much of the infrastructure of the mid 20th century, proceeded to convert wasteland into productive farmland on Lochinver

The Stevenson Family achieved success where many lesser people just went broke.

Move along 60 years and that asset created from a pumice desert is judged an arm of an Empire that would benefit the company direction by being liquidated and the funds generated, taken back to Auckland where they will create eight thousand jobs.
Now Nigel Latta and his envy driven mates will decry further evidence of a mythical widening gap where the rich get richer where as every one of those 8 000 who get a job near to where they wish to live will be grateful for an opportunity.

Lochinver Station has been on the market for many months and the only buyer to emerge is the Chinese entity that purchased the Crafar farm shambles that was under capitalised, run down with serious animal health and welfare issues and falling production.
Shanghai Pengxin purchased that conglomerate and installed Land Corp, the state owned farmer to manage it.
Reports claim, a significant turn around on all fronts for The Ex Crafar empire.
It is claimed that Land Corp will probably get the task of operating Lochinver and what that future involves is as yet, not disclosed.
At altitudes ranging from just under 700 meters asl to nearly 1 000 meters options are a little limited with a short growing season and cold extended winters.

I am no fan of government in business but as the entity now running and managing the state farms, Land Corp has a very well trained staff from the grass roots to the financial management executives required to run an operation such as Lochinver.

Who owns the land is of no moment.

Many make a fundamental mistake around title when a foreigner purchases a farm, particularly when that buyer is Chinese.
Shania Twain, Canadian I think, bought a large tract of High Country South west of Lake Wanaka when Helen Clark was Prime Minister. That purchase was nearly twice the area of Lochinver and the investment was an eye watering one at that time,  twenty million dollars plus.
Ms Clark was very supportive and posed for pics, now the heirs and successors to her fifedom are at the forefront of opposition to the Lochinver sale.
James Cameron movie mogul and darling of the socialists has bought up a number of farms in the SW Wairarapa and I have seen zero discussion on those transactions, the proposed future use or local involvement in management or employment options.
Shangai Penxin however seems to have been very open and inclusive in the Crafar deal and it appears they have similar objectives with Lochinver.

The fundamental mistake referred to above involves Title. A chunk of the land purchased by Twain was Crown leasehold with some described as freehold,
I assume Lochinver is Freehold.
Not being a lawyer I will be corrected but what is described as "freehold" is, but the most unrestrictive title that used to go by the quaint term "estate in fee simple".
Land titles can range from Freehold, CRL or Crown renewable lease, Lease in Perpetuity or 999 years, 33 year renewable lease and on occasions annual lease.
The terms of the lease vary the value ascribed to such land.
Even what is described as freehold is still a form of "lease" just the highest variant.
With the plethora of restrictions around use, zoning, and property rights, continually under review and often attack by legislated activity, "freehold" is becoming an increasingly false and erroneous term for title. Maybe "best leasehold " would be more accurate

I own 16 acres, the state, when the last subdivision occurred took an esplanade reserve one chain either side of a stream that flows through, about 1 acre. No compensation, they just took the freehold title and stole/converted it.
The bloody local authorities then requested that I as the owner of the remaining land keep the waterway clear of trees and vegetation along the stream to enhance flow and protect infrastructure down stream.
I cannot subdivide the 16 acres, build houses on subleased plots, remove native vegetation over 2meters high, cut firewood, divert the stream or put a bridge over the stream without permission of bureaucrats, and such rights can and probably will be refused while applications to circumvent such extinguished rights will be very expensive to challenge.

Shangai Penxin cannot take Lochinver anywhere, if they fail to maintain its environmental assets they face an enormous bureaucratic machine willing and able to cause them serious grief.
Meanwhile The Stevenson Group intend to create eight thousand jobs in and around The Queen citywith the seventy million dollars  those Shangai Penxin (slants) owners, provided.

As a young man facing the daunting prospect of buying a farm half a century ago, I was competing with Businessmen, many of whom had made profits from the wartime bureaucratic machinations, others with high cash flow operations such as the Stevenson Family, and Professionals such as Lawyers, Accountants Doctors and Medical Specialists who were seeking to create a rural empire , often for spawn who had little hope or ambition for such success unaided.
It was a very daunting prospect for a young man with a wife, two kids, and a very modest savings account hard earned and accumulated by living like a monk, but we did it with an original 5% equity

Farm ownership and production has moved way down the track of evolution from that situation we embarked on c1960.
The Corporate Farm is the Current Model.
In a heated debate over farm ownership all those years ago, a good mate made the salient point, true then and even truer today; Not every truck driver will own his own truck.

Corporate farming has created many rewarding opportunities, both financial and creative for anyone with a desire to go farming and owning a nefarious title to the land being worked is a very minor component.

UPDATE from Ele at homepaddock.
The nasty evil bastard foreigner who now controls the Land Shania  bought originally, Motutapu and expanded to include, Soho, Glencoe and Coronet Peak Stations has placed 53 000 Ha into the Queen ElizabethII Trust for all New Zealanders to enjoy. That is an area nearly four times the area of Lochinver.
Mr c wants to prevent such things ever coming to pass


The Veteran said...

But all this matters nowt when xenophobia rules ok and there's an election looming.

Remind me just how many people Lochinver Station employs (and presumably will continue to employ under its new owners) and never mind the fact that the Stevenson Group is planning to reinvest the cash generated from the sale in expanding their South Auckland operation creating thousands of new jobs (reported 8,000).

Opponents of the sale would have us believe there is a convoy of ships headed this way from China and that Lochinver will somehow be magically dug up, spirited away, and lost forever.

So stupid if it wasn't so sad.

Psycho Milt said...

Once we slash through the thicket of straw men laid out in the OP and above comment, what we're left with is that National and its supporters are pleased that:

1. Land prices have been inflated beyond the ability of New Zealanders to purchase large farms.

2. Large areas of the country are being bought up by front organisations for a murderous, totalitarian and (oh, the irony) communist dictatorship.

The Veteran said...

PM .... 8,000 new jobs, lets halve that to say 4,000 and each one a straw man in your lexicon and lets not even go down the track of debating whether or not an owner of whatever should not be allowed to sell it for the best price.

No matter too that should perchance your lot get in the owner will be dunned CGT on the sale price in order that the fruits of his work should be distributed among the great unwashed.

gravedodger said...

Yeah Milt @ less than 1% of the total last count, is not really "vast" or even large areas when aggregated.

Now about James Cameron, Shania Twain's ex squeeze, Harvard University, Julian Robertson, Anders Crowfoot, various French Wine houses, other nationals and corporates from Lichtenstein Germany, The Netherlands, Belgium United States, Canada and Australia, oh they aren't Chinks eh.

What is the magical figure when NZ land becomes affordable and how to establish such a mythical calculation?
I guess it will be set by a "commission" made up of failed university oinks and equally illustrious ex politicians who will to a person understand such complex and esoteric matters so much more creatively than a fucking market.

Many many New Zealanders are still buying productive primary industry land, Lochinver and The Crafar conglomerate were unnattractive to NZ investors on account of the size, unless you count the now Irish Magnate who saw an opportunity to buy the latter and break it up as his MO is wont to do.

If the NZLP was still in power while Lochinver was for sale, are we the peasants expected to believe they would stop another seventy million being invested or would that only apply in election year while Key is running things.
Remembering the significant volume of land that passed into foreign hands when H1 was running the sinking ship.

Did I ever tell you about the estimated 3x Plus market value H1 paid for St James Station NW of Hanmer Springs, in the considered opinion of many crusty old High Country Men and Women because she enjoyed walking over it, of course not forgetting when she made that great trek it was owned by the Stevensons, different family same spelling and absolutely no need, environmental, economic or freedom of passage to buy it anyway.
Give me a break.

gravedodger said...

Updated post re the Shania Twain Purchase under the H1 Administration Mr c was a member of but now wants to prevent such an event being repeated.

Adolf Fiinkensein said...

Of course Cunliffe and Co shortly will move to prevent NZers from buying any property in Australia or the US or the UK as the funds rightfully should be kept in NZ.

Well, that's the next obvious step.

Nookin said...

I suspect the nice Mr C will focus more on banning Fonterra from establishing production hubs involving the acquisition of numerous farms in China.

J Bloggs said...

The big difference between Shania, Cameron et al, and the chinese conglomerate (funded, and therefore controlled by the chinese govt. as you point out) is quite simple: Shania et al. are not also building milk processing plants, nor are they in the process of developing a complete chain by which milk products can pass from Chinese owned farms through Chinese owned processing plants and onto chinese owned vessels to China, without passing through any NZ owned system at all. Nor, once that chain is complete, do Shania et al have the ability to shut out every other NZ milk producer at the chinese border, thus ensuring only the chinese owned company product is sold in China. Then the chinese owned companies will restructure thier organisation (like google and others) to ensure thier NZ based components end up paying no tax to the NZ government. And when the Government finally gets enough balls to complain about the situation, Shania et al do not have a supercarrier to wave in the NZ govt's face while telling them to 'shut the f*ck up'.

And while Kiwi jobs are safe in the short term, there will be a steady influx of Chinese workers to the farms, to learn the skills off the Kiwis running it, and slowly and surely the kiwi percentage of the workforce will drop away, until the farms are 100% staffed by Chinese workers (as happens in the African nations that China has a foothold in).

China plays the long game - watch this space.

Psycho Milt said...

...less than 1% of the total last count...

If you're having to frame your counterargument in terms of percentages of the total land area of NZ, you're effectively agreeing we're talking about large areas of land.

Now about James Cameron, Shania Twain... etc

Yes, about them. I imagine that, even in the wildly unlikely case that James Cameron and Shania Twain were buying land here as fronts for the Canadian government, the Canadian government is not, last time I looked anyway, a murderous totalitarian communist dictatorship with expansionist aims that very much involve what might euphemistically be referred to as 'aid' and 'business investment.' Further, thus far I've seen no evidence of corruption involving government ministers and Canadian citizens, but a shitload of it involving government ministers and Chinese citizens.

...oh they aren't Chinks eh.

As pointed out above, the issue here isn't "Chinks," it's the national interest.

... Lochinver and The Crafar conglomerate were unnattractive to NZ investors on account of the size...

Well, exactly. We've priced NZers out of the market for large purchases. Obviously, if you're a landowner, wealthy foreigners causing rising land prices is a good in and of itself, but the government ought to take the interests of people other than landowners into account. I realise that's a concept the National Party holds in contempt, but that's because they're pricks.

JC said...

"1. Land prices have been inflated beyond the ability of New Zealanders to purchase large farms."

Suggest you do a check going back 100 odd years. Large farms being bought by foreigners is likely the "norm* simply because they are too difficult to work with limited local capital.

The other point to make is that no one should want to break up the iconic stations if fresh money, markets and ideas can be deployed to keep them going, diversify and/or deepen the income streams and use legislation to protect the NZ interest in land, water and flora. Ownership in the sense of land title is irrelevant to the main objectives.

"Large areas of the country are being bought up by front organisations for a murderous, totalitarian and (oh, the irony) communist dictatorship."

Whew! for a minute there I thought you meant the US, not the world's largest emerging capitalist country.. which is surely China.

The real irony is that the 7000ha neighbour is owned by a fading capitalist power under King Barry compared to Lochinver which may be owned by the rising capitalist Nation of the East.


The Realist said...

I think the problem is that the farm produce whether it be wool meat milk will bypass New Zealand export system and find its way direct to China? I'm not an economist but I think that's the problem.

Nookin said...

The realist
Given that Russel Norman is bleating on about too many eggs in one basket and that the dairy industry is on the way down, isn't it a good thing that landowners want to realise their capital and diversify. What a pity that Red Russel and the nice Mr Cunliffe won't let them?

Adolf Fiinkensein said...


You seem to forget that raw milk must be processed before it is transported. You seem also to forget that so called 'freehold title' does not give the occupier unfettered access to the land.

In the unlikely event vast quantities of produce mysteriously dissappear nto thhinnair (which is what you are suggesting) it is not to difficult to legislate a remedy.

Psycho Milt said...

Nothing has changed except for the inflation rate of xenophobia.

What? Lots of third world government front companies buying up NZ farms back then, were there? Can't say I'd heard of it...

Adolf Fiinkensein said...

Comment corrected for typos


" We've priced NZers out of the market for large purchases."

Well we haven't actually. There are plenty of NZers with enough money to buy this farm. They just don't want to. The chows appear to be paying too much. More fool them.

BTW in 1969 when I graduated, farm prices were such that you would be lucky to get a 2% return on your capital.

Nothing has changed except for the inflation rate of xenophobia.

The Realist said...

They will build their own factories as they have in the south island.

Adolf Fiinkensein said...


Who the hell do you think works in those factories? Hundreds of illegal Chinese immigrants?

The Realist said...

Well Chinese probably. In any event even if the factories are manned by New Zealanders at least we will know our place.