Wrecked farms get a $23 million makeover
When state farmer Landcorp took over the dilapidated ex-Crafar farms in the North Island four years ago, it had little idea of the challenges lying ahead.
Terry Lee, representative of Pengxin Group to New Zealand and Australia, says the original aim of the review was to obtain clarity on the 'counterfactual' used when assessing sales of non-urban land of greater than five hectares to overseas investors.
"In the case of Lochinver Station, the Overseas Investment Office (OIO) used a counterfactual which compared our investment and development plans against those of a hypothetical alternative New Zealand purchaser," he says.
"Yet this hypothetical purchaser was assumed to be unconstrained and, as the initial sale process showed, non-existent in fact.
"There is a great deal of confusion in the market about this aspect of the OIO Act and we initially believed that a Judicial Review was the most effective path to provide much needed clarity for sellers and potential purchasers of New Zealand farmland.
"We now believe, however, that this need has been recognised by the Government and the OIO and our preference is to take part in any discussions in the hope that changes take place to restore confidence to the market."
Lee says the application process has been very lengthy, and the judicial review process has been delayed and could be subject to appeals with further delays and uncertainty.
"These processes have been a distraction for our team and a significant expense," he says.
"Our decision to withdraw the Judicial Review will enable us to devote our energies to management of our New Zealand farms, new product development and value added exports to Asia.
"Our strategy to invest in agriculture production around the world remains unchanged, but it is very difficult to operate without clarity over the counterfactual test and certainty of timing.
"We acknowledge the good faith of the Lochinver Station vendors during the acquisition and application process and wish the new owners well."
The chairman of the Pengxin Group, Zhaobai Jiang, says the Judicial Review was an unnecessary distraction at a time when New Zealand and China have reopened talks to upgrade the Free Trade Agreement. He says "good relationships and the FTA between our two countries are more important than private business".
Lee says the application to the OIO to purchase the Northland Pinny Farms has also been withdrawn as the properties have been sold unconditionally.
