Landcorp in talks to run Crafar Farms

Thursday 12th January 2012

State-owned Landcorp Farming is in talks to operate the Crafar Farms should Shanghai Pengxin Group’s application to the Overseas Investment Office succeed but it has denied a report it would pay $18 million a year in rent.

“The reports are quite untrue – there is no figure yet,” Chris Kelly, Landcorp chief executive, told BusinessDesk. “We are discussing the possibility of running the farms – we had all hoped to have it sorted by now.”

The Chinese company has been waiting almost nine months for an answer to its application to buy the farms, in a deal that is reportedly worth at least $200 million. That would top a rival proposal by a farmer group led by businessman Michael Fay by $30 million.

Hardie Peni, chairman of the Tiroa E and Te Hape B Trusts which are part of the Fay group, said the $18 million figure was based on a standard share-milking agreement and Landcorp’s own production forecasts.

“From what we’re hearing Landcorp have negotiated a deal that is the standard 50-50 share-milking deal familiar to the wider dairy industry,” Peni said in a statement. The Landcorp plan would result in a state-owned company paying rent to “Chinese sitting in Shanghai” as “tenants on what was our own New Zealand farm land.”

The investment banker and a syndicate of local iwi and farmers lodged a $171.5 million bid for the Crafar family farms in September, as a back-up to a rival offer from Shanghai Pengxin being turned down by the OIO.

The purchase of large blocks of farmland by foreigners has been in the government’s sights after the Natural Dairy deal for the Crafar farms emerged in 2010, prompting the government to review foreign investment rules and ultimately impose stricter controls.

(BusinessDesk)

BusinessDesk.co.nz

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