New Zealand commodity prices are likely to feel downward pressure over the year, says ASB senior rural economist Nathan Penny.
The 13 dairy farms and three support blocks make up Tahi Farms, owned by TheLand, a subsidiary of Milk New Zealand, the operating arm of Shanghai Pengxin.
The Tahi farms were previously owned by Crafar Farms, which went into receivership after a spate of environmental and animal welfare breaches in 2009.
After buying the farms, Shanghai Pengxin formed Pengxin NZ Farm Management -- a joint venture with Landcorp to revive the farms.
Speaking at the farms’ handover in Hamilton this month, Landcorp chief executive Steve Carden said he would not try to “sugar coat” the joint venture.
“We had difficult beginnings: a complex partnership agreement and 13 very run-down farms in a state of disrepair.”
But despite this, by persistence Landcorp and Shanghai Pengxin managed to “work through a myriad of problems” to get the farms back to a state New Zealanders could be proud of.
Carden thanked the staff for running the farms despite the problems of housing and poor milking and farm facilities.
TheLand chief executive agribusiness Justine Kidd says the joint venture was “a real innovation bringing together international equity with NZ expertise”.
“It has been tough: the farm assets needed work and investment, the milk price came tumbling down and the public scrutiny did not let up.
“It is a tribute to now stand here beside Landcorp and celebrate the achievements of this partnership…. It really is a good news story for agriculture in NZ.”
TheLand is now looking to build on the work Landcorp has done. The company has an interesting and diverse farm asset in the Tahi Farm Group and this presents both opportunities and challenges, Kidd says.
“Our underlying strategy is to grow our asset value, with the asset being described as our people, our community, our environment and our farms.
“We are focused on understanding where the opportunities are to improve our productivity, how we can keep producing quality milk for our consumers in NZ and China, while improving our sustainability and enhancing the impact we have in our local communities and environments.”
From June 1 the 13 dairy farms will be managed by nine managers, three contract milkers and one 50:50 sharemilker. Terry Lee, Milk New Zealand’s managing director, says the farms have been transformed under Landcorp’s leadership and now have a “a high standard of professionalism, in respect of farm management/productivity, environment protection, animal welfare and looking after people”.
“The impact of that transformation has been manifest – bolstering and motivating the farm teams, their families and local and wider communities – and this has been widely acknowledged within the dairy industry.
“We could not have achieved this without Landcorp – they have done a great job.”
TheLand also owns 13 dairy farms (Purata Farms) in the South Island. The company uses milk from the farms to make UHT milk and milk powder for export to China.
Shanghai Pengxin expects to ship 1900 containers of value added products to China this year.
Facelift for wrecked farms
Improvements to TheLand farms (North Island and South Island):
- Four new dairy sheds
- Installation of new technology in 11 dairy sheds
- Refurbishment of farm housing
- Construction of six new homes
- Installation of six new effluent systems
- 1300ha regrassed
-300km of fencing, including riparian
- 900 extra water troughs
- 300ha irrigation upgrade
Establishing the North Island Dairy Training Academy.
Chinese guests welcomed into Kiwi homes
Pengxin NZ Farm Management joint venture chairman Rick Braddock says when the board took on the responsibility four years ago “no one had any idea how many economic potholes there would be on the road”.
The last four years have been among the most challenging for the NZ dairy industry, he says.
“We have seen droughts for two years, a record high milk payout followed by two disastrous payout years… and all time we were undertaking major capital development on all farms.”
Now, after $23 million of development work, productivity has increased, costs are down, animal welfare has improved and major environmental work has been done.
Improvements to staff welfare and housing have been satisfying, he says.
“With pride, and gratitude to Landcorp, we have survived this difficult trading period and flourished as the benefits of the hard work of Tahi’s team and the large capital spend have come to fruition.”
Tahi employees opened their homes to host Pengxin guests, Braddock says.
“The cultural exchange and understanding that comes from this type of Kiwi hospitality is something the rest of NZ could observe and embrace.”
Braddock says history has been made in ensuring the success of this first major Chinese/NZ Government pastoral farming joint venture.