20 September, 2011
For Immediate Release

Local Farmers Make $171.5 Million Offer for all Crafar Farms

A group of central North Island dairy farmers led by Sir Michael Fay has increased its offer to include all the Crafar dairy farms currently being managed by receivers Korda Mentha.

The group had previously indicated an interest in nine of the 16 Crafar farms. Now more farmers, including significant local Iwi interests, have joined a $171.5 million offer for all 16 farms – an average of more than $28,500 per hectare for the properties.

The offer was tabled with receivers earlier today and they are now reviewing the details.

“Our group of farmers is the only other buyer for all the farms in this sales process and following satisfactory due diligence we are ready to go,” said Sir Michael. “As soon as we have a signed deal with the receivers they can hand over the keys and we’re ready to walk onto the land. Obviously that’s subject to the Overseas Investment Office rejecting the current Chinese contract.”

Sir Michael said the group was a mix of Iwi and local farmers who already own dairy farms in the Central North Island and who don’t have the complication of needing OIO approval.

“We’d like to be on the farms before Christmas to get them up to full production for the new season starting in mid 2012.”

Sir Michael said the average per hectare price was an accurate reflection of current land, asset and herd values and the opportunity to closely inspect production figures would need to confirm the value of the $171.5 million farmer group offer.

Steve Bignell, of Stretton’s Chartered Accountants in Taupo is the lead negotiator for the group of farmers and says the average $28,500 per hectare offer placed the contract price in the leading bracket for dairy farm sales in the area and across New Zealand.

“There are variations in the per hectare price we’re offering for each farm in the Crafar package – for example there are properties ranging up to $38,000 per hectare - but as an average price it’s getting up there when you look at current prices in the market,” said Mr Bignell.

“The group’s earlier offer for nine of the farms attracted more local interest from farmers and Korda Mentha provided us with additional information about all the properties. That information and the increased level of interest enabled us to put together a compelling revised offer for the complete Crafar Farms operation.

“About 40% of our group’s current offer comes from Iwi farming interests and all the farmers in the group already have dairy farming interests in the Central North Island region,” says Mr Bignell.

Hardie Peni Chairman of the Tiroa E and Te Hape B Trusts is one Iwi investor who’s Trust is farming south of Te Kuiti. He sees the Crafar farms, located five minutes from their farms, as complementary to their current operation.

“I want two of the farms in the Crafar portfolio to sit alongside our farms. The Iwi of Ngati Rereahu wants to have their traditional tribal land returned. This opportunity means that land lost can be recovered by its rightful owners. A successful transaction will create more opportunities to develop primary industry skills and employment for Iwi members,” says Mr Peni

“I hope the receivers see both the value and the sense in a strong New Zealand farmer offer and make a quick decision to go ahead with our group of locals.”

In confirming the increased offer for all the Crafar farms Sir Michael reiterated earlier comments about the importance of retaining productive land ownership in New Zealand hands.

“I firmly believe we must keep our competitive advantage for exports and that advantage is in what we do with our land. To me that means we must retain New Zealand ownership of our productive land,” says Sir Michael.

“Our group has made a top of the market offer with no OIO complications for the receivers or the banks. It’s a purely New Zealand offer from a group of local farmers who know the area and want to get on and make the most of this productive land.”

ENDS

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