Latest OIO application for the former CraFarms

Federated Farmers believes the application by China’s Shanghai Pengxin Group Limited, though its locally owned subsidiary, Milk New Zealand Holding Limited, will be an acid test for revised Overseas Investment Office (OIO) rules

“Federated Farmers preference was to have seen the 16 former CraFarms sold as individual farms when Natural Dairy’s bid hit the rocks of the Overseas Investment Office,” says Lachlan McKenzie, Federated Farmers Dairy chairperson.

“One day someone will make a mini series out of what has become a saga. There have been so many false dawns with the former CraFarms that I hesitate to say this is the end.

“But this is strong evidence that the OIO revisions of late 2010 have materially changed the thrust of the application.

“The OIO revisions were in line with the Federation’s draft policy on foreign ownership. We effectively won the changes we wanted on overseas investment, so we now need to let the officials determine the application on the merits of those rules.

“Seemingly gone is the ‘think big’ approach of Natural Dairy. Pengxin Group’s $200 million investment is to buy the 16 farms and upgrade them over two years. Upgrade could well be a euphemism for returning the farms back to full production.

“If approved, Federated Farmers wishes to see Pengxin Group Limited/Milk New Zealand Holding Limited utilise sharemilkers on the 16 farms. This provides an opportunity for sharemilkers to build equity in an international environment while speeding these farms to full production.

“I do take heart from Pengxin Group’s statement that it will be supplying Fonterra Cooperative Group.

“If approved, Federated Farmers would further wish to see Pengxin Group Limited/Milk New Zealand Holding Limited form an export joint venture with one of our existing cooperatives - Fonterra, Westland or Tatua.

“Partnering with a local cooperative would help ‘Kiwi-ise’ Milk New Zealand Holding Limited, while building a partnership in China with Pengxin Group.

“This goes to the heart of realising value for New Zealand under the revised OIO rules,” Mr McKenzie concluded.

ends

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