New Zealand worries over Chinese investment in dairy farms
Icelandic authorities recently vetoed the sale of land in the Icelandic inland to a Chinese billionair, Huang Nubo. That case is indeed still milling on. The latest is that the adjacent municipalities are exploring the possibility of buying the land, with a loan from Nubo, to rent it out to Nubo.
But it’s not only in Iceland that Chinese investment is met with some skepticism.
This week, the High Court in New Zealand halted a planned sale of dairy farms to Chinese investors. The reason for the ruling is that the High Court claims the New Zealand government overstated the economic benefits the Chinese investment would bring when it allowed the sale some 16 months ago. The ruling isn’t prohibiting the sale per se but puts onus on the government to review the evaluation with stricter criteria. The court case was brought by some Australian farmer and a banker who were outbid by the Chinese investor.
It’s all familiar to Icelanders: the supporters of the sale say it brings much needed foreign investment into the dairy sector that’s anything but prosperous. Those against it says it runs against Australian interests to sell farmland. Quite interestingly the buyer in spe is a company run by a property developer called Jiang Zhaobai. As in the case of Nubo’s company property in China is notoriously difficult to evaluate.
*Previous Icelogs on the Nubo sale are here and here.
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Umm bit(too)close to home. First, I am not sure it is some Australian farmer (rather they are a group of largely NZ farmers) and the “banker” Sir Michael Fay has an “interesting” background
http://en.wikipedia.org/wiki/Michael_Fay_(banker)
Michael Fay resembles in several aspects the Icelandic bankers that have featured prominently in this blog in sailing close to the wind. He emerged with his money others including the NZ taxpayer were not so lucky.
On the other side Landcorp have an excellent record managing farms and are one of the biggest and best corporate farmers in the world. It would be difficult to justify a statement that they would do “worse” than any owner operator.
To cut to the chase should significant farming land have overseas (i.e. absentee) owners? This has several layers probably the most relevant being that many ancestors of farmers in New Zealand were tenant farmers or landless before they emigrated to NZ. They came because wealth was unequally distributed at home and they made considerable efforts to make sure that would not happen in NZ (see http://www.teara.govt.nz/en/1966/land-settlement/1 ). This is muddied because NZ dairy farming investors in turn recently owned significant assets in other countries such as Uruguay http://www.nzfsu.co.nz/index.pasp? but were then bought out by another international food company.
My personal view is extreme unequal distribution of wealth is economically sub-optimal and definitely socially. That is the real issue at stake here. You then have to ask why… It often comes back to untaxed capital gains or lack of an appropriate “resource rental”. Next we will be talking about Icelandic fishing quota
D_Boone
17 Feb 12 at 9:20 am
In New Zealand, this issue is one of the controversy. The scope was on the large scale overseas investment especially on farmland.
Dafyd Miller
14 Aug 13 at 4:00 am