New Zealand finance minister says ‘corporate farming’ won’t survive
New Zealand’s Minister of Finance Bill English has cast doubts over the long-term viability of corporate farming in New Zealand.
His comments come in the wake of the controversial sale in New Zealand to Chinese company, Shanghai Pengxin, of the 34,000ac (13,800 hectare) Lochinver Station near Taupo valued at more than NZ$70 million (€44m).
English said: “My own personal view is in the long run – this applies to Kiwi as well as offshore – corporate farming entities don’t survive and I know that sort of runs against the trend but I’ve seen the cycle two or three times,” he said.
Speaking on the issue which has caused a great deal of anger among the New Zealand farming community as more and more land comes under foreign ownership he said Farming is a ‘low return on assets’ business. He said not including capital gain, returns are around 1-2%.
“Prices peak. When they start falling the syndicates and the shareholders want to sell out. And if I was them I would too, because if you don’t live it and love it you’ll end up asset rich and cash poor.
“We’ve seen Tasman come and go, New Zealand Dairy Farms come and go, the Hubbard empire come and go, Solid Energy’s empire has just been sold off without anyone noticing but the locals in the last few months. These guys [Pengxin], as much as they might not be saying it, they’ll come and go. The owner-operator works. ”
If the sale of the 34,000 acre Lochinver Station goes through it would be the second-biggest foreign acquisition of New Zealand land by value. The Chinese company now owns 16 farms in the North Island and plans to secure ‘operational synergies’ over time in buying the property and some of its neighbouring farms.