OIO green light for Synlait purchase
Synlait’s $112 million bid for South Canterbury dairy processor Dairyworks has been given the green light by the Overseas Investment Office.
It may provide a much-needed acid test that could add confidence to Overseas Investment Office (OIO) processes, it says.
Federated Farmers believes OIO rules must be applied without fear or favour.
In respect of Shanghai Pengxin Group's approval to purchase the former CraFarms, it still faces two hurdles. The first is a January 31 deadline set by the receivers for the sale to go unconditional and the potential judicial review.
"We're under no illusion the OIO's decision will not be universally popular among farmers, let alone the public," says Bruce Wills, Federated Farmers president and its economics and commerce spokesperson.
"The OIO needs to follow its own rules and processes without fear or favour. Overseas investment by opinion poll risks spooking overseas investors, who not only fund government deficits, but mortgages too."
But Federated Farmers says the receivership of the former CraFarms has raised questions from farmers about the way insolvency is managed
"Since December 2009, 150 dairy farms have been sold nationwide with most likely to have been sold to Kiwis. In the three-months to December 2011, 16 dairy farms were sold in Waikato and the Bay of Plenty alone.
"This tells me that all the former CraFarms could have been sold off individually and to Kiwis in all likelihood."
Meanwhile both the Labour and Green parties have condemned the Government's decision to allow the sale.
Green Party agriculture spokesperson Steffan Browning says selling of productive land as food prices rise globally is economic folly.
"One of the dreams of sharemilkers is to save enough money to buy some land and become a dairy farmer. But that dream is fast disappearing as the price of land is driven up, in part, by overseas corporations buying up land," he says.
Labour Leader David Shearer says the Pengxin group has no background in farm management.
Landcorp, the Kiwi SOE which itself made a bid to buy the farms, will now be paying a Chinese Government-backed company a touted $18 million a year to rent and manage the farms for it.
"This latest decision will be a massive kick in the guts for the local group of iwi and farmers who also put in a bid," Shearer says.
"Labour is not against foreign investment but any deal must demonstrate added value for New Zealanders. This one doesn't."
