Chinese plan $200m business to export 'Crafar' milk

Thursday 14th April 2011 2 Comments

The latest Chinese company bidding for the 16 farms owned by four financially-troubled Crafar family companies - Shanghai Pengxin International Group Ltd, - says it plans to boost milk production from the properties, and export infant formula, cheese and icecream to China.

It has set up a Hong Kong-based subsidiary, Milk New Zealand Holding Ltd, whose only director will be the chairman of Pengxin, Shanghai real-estate multiillionaire Jiang Zhaobai.

Shanghai Pengxin Group this week lodged an application with the Overseas Investment Office (OIO) to buy the farms.

Purchase of related assets and upgrading of the farms will cost $200 million in the first two years, and will be funded by a shareholder advance from the parent company.

China - already a significant market for New Zealand - offered a huge and exciting future potential for dairy exports, according to Jiang.

Milk New Zealand will upgrade the farms, and employ more New Zealanders, the company said today in a statement.

"We have great admiration for the New Zealand dairy industry and its potential and believe we can be a strong ally for New Zealand dairy industries through out international trade connections, and, in particular, our networks of influence within China and Asia."

The receiver for the Crafar family's four companies - KordaMentha - said the Pengxin offer was the best that it had and the deal was now waiting on OIO approval.

Shanghai Pengxin has said its total assets were about US$2 billion (NZ$2.58 billion), in property development, infrastructure, mining and agriculture.

Jiang's net worth, with his brother Jiang Lei, was reported by Forbes magazine to be US$670m.

Jiang grew up in a farming village in Nantong, but has ridden the wave of China's economic boom, starting his first business in 1988, the Seattle Times reported last year, when he visited looking for American companies focusing on newly emerging technology.

His company owns 650 hectares of farmland near Shanghai, used for sheep, wheat and soybeans, and has another 930ha in Shandong Province for a sheep farm. It plans to have flocks totalling three million sheep within five years.

In 2005, the company invested more than US$20 million in Bolivian sorghum, soybeans and corn and is negotiating further farming investments in Argentina and Cambodia.

The farms were previously sought by Chinese investors using a mining company rebranded as Natural Dairy NZ Holdings Ltd to buy the farms through a New Zealand company, UBNZ Funds Management Ltd.

Cabinet ministers Maurice Williamson and Kate Wilkinson last year declined consent for Natural Dairy's application because they were not satisfied that all the individuals with control of Natural Dairy were of good character.

Hong Kong-listed company Natural Dairy has since said UBNZ director May Wang was never directly employed by Natural Dairy, and that all monies lent to Ms Wang's UBNZ companies were subsequently repaid to Natural Dairy.

Separately, Natural Dairy said it had a contract with NZ Dairy Processing Ltd's dairy factory in Tauranga. A Chinese subsidiary of Natural Dairy previously announced plans to source about 39m litres of raw milk from Fonterra and process it into 37.5m lt of UHT milk for export.

NZPA

Comments from our readers

On 14 April 2011 at 5:41 pm A Shaw said:

New Zealand land should not be sold with a Freehold Title. As a leasehold sale full restoration should be obligatory at the lease end.

On 15 April 2011 at 9:38 am Anne said:

When will New Zealand learn that land is a finite resource and we can't keep selling it to overseas interests? The Chinese are sensible enough not to sell land and we should follow suit. Profit will also go overseas yet all the associate pollution from dairying will remain here. Wake up New Zealand - you're losing your country and your children's prosperity!