CraFarm 'victor' still has hurdles to jump

Federated Farmers believes Overseas Investment Office (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 31 January deadline set by the receivers for the sale to go unconditional and a potential Judicial Review of the decision.

“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.

“Before Christmas, the receivers, KordaMentha, set 31 January as the deadline for the sale to go unconditional. Whether that’s possible rests with the Courts given a Sir Michael Fay led group has filed papers in the High Court for a Judicial Review.

“Sir Michael’s legal challenge will put overseas investment rules and processes through the judicial wringer. It may provide a much-needed acid test that in the long-run, could add confidence to OIO processes.

“It is critical the OIO has the resources to police any conditions it attaches.

“An OIO approval is like a resource consent. Failure to comply with conditions should bring sanction with the ultimate being cancellation of an overseas investment approval.

“Federated Farmers demanded and got an economic interests test put into the OIO’s revised rules. Landcorp, who will manage these farms, will be promoted in China and if Shanghai Pengxin Group moves into processing, it will have to be as a 50:50 joint venture with Kiwis.

“In turn we’d hope Landcorp will look to utilise sharemilkers given there is a training and development dimension to the OIO conditions. We have excellent sharemilkers in New Zealand who are looking for opportunities to build equity.

“The receivership of the former CraFarms has raised more than a few 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 Kiwi’s in all likelihood. This has been a saga that has gone on for far too long because individual farmers were seemingly locked out unless they could buy the lot.

“That‘s something we don’t wish to see repeated,” Mr Wills concluded.