New overseas investment rules an important step

The headline detail of new rules to guide overseas investment is being welcomed by Federated Farmers.

“It’s potentially an elegant solution to a very difficult but complex issue,” says Don Nicolson, Federated Farmers President.

“I must say we have not seen the detail that will underpin this new framework, nor the text of the ministerial directive letter. That’s vital and what we’re hoping for is a fine balance between opportunity and harm.

“The simple fact is this, our economy and our way of life would implode tomorrow if it wasn’t for overseas investment.

“Bumper sticker slogans don’t make for good public policy and farmers, if anything, need to be saved from those who wish to save our farms.

“That’s not to say there isn’t pent up demand for New Zealand farmland.

“Brazil is moving to restrict agricultural direct investment and this is why we need these new tests. While we’re a small food producer in world terms, that doesn’t stop us from being a major global food exporter.

“Yet New Zealand has an open and competitive market for land for the simple reason it is the best way to establish price between willing buyer and willing seller.

“These new rules should not trip that market up, as the last thing we wish to see is backsliding to the 1970’s or early 1980’s.

“At this moment, there’s very little movement in rural land sales because farmers are focused on productive investment and retiring debt.

“Farm sales in August, were actually the second lowest ever recorded by the Real Estate Institute of New Zealand. This is the market correcting itself but it also makes New Zealand farm land more attractive if the price for entry declines.

“Yet we must ask this basic question, what is a foreigner? The New Zealand farm system is made better by the ideas and innovation that come from outside. In fact, the 2006 Census reminds us that 23 percent of all Kiwis were not born here.

“There’s no way Federated Farmers would support anything that makes it difficult for immigrants to settle here with the intention of farming. I honestly think the Government grasps that and these rules are instead aimed at very large corporate investors.

“That’s the kind of detail we’re now looking for. How to prevent, for example, excessive land aggregation by foreign entities or vertical integration of supply, production and distribution that locks New Zealanders out. We think the proposed ‘mitigating factor’ goes along way towards balancing large inwards investment without blocking opportunities for New Zealand.

“The Government’s thinking mirrors that of a paper our policy staff prepared for the Federated Farmers board last Friday. One of the six options outlined in that paper was a ‘substantial harm to the national interest’ test that bares close similarity to the ‘economic interests’ factor.

“It seems we’re on the same wavelength and we look forward to the detail to come,” Mr Nicolson concluded.