We all know New Zealand First takes a hard line on foreign ownership. But with the Lochinver sale that line just got a little bit harder

This is why John Key has been saying to anyone who'll listen that you can take nothing for granted when it comes to this year's election. Out of left field... or at least a field near Taupo... can some an issue that blindsides you. This weekend it's Shanghai Pengxin's purchase of Lochniver Station and foreign ownership in general.

Colin Craig started the week with the news he must have dreaded hearing. No deal, said John Key. Craig had failed his year-long audition as National's dance partner. Key and his inner circle had been watching Craig, and watching Craig's impact on the polls, and decided he wasn't worth the candle in East Coast Bays.

If, say, the Conservatives get three percent and that's three percent of centre-right vote wasted, they'd rather lose the 1-2 percent of that's their share of that vote than greater damage by association. Or so Key has decided.

The winner out of this was Winston Peters. In short, National switched insurance policies. Rather than fall back on Craig if it can't reach 47 percent and govern again with Dunne, Seymour and Flavell, it will now have to fall back on Peters. The gamble being that Peters will choose to go with the bigger party, the more stable looking government and the one without Internet-Mana in it. And while Key was making soothing noises about a constructive relationship with New Zealand First, a gamble it still is.

Colin Craig has responded by sending Christine Rankin to Epsom (nothing more than a minor irritant) and revealing the proposed 13,800ha Lochniver sale a day after the House rose. While I'm sure he would have broken the story anyway, deal or no deal, its timing is a clear one-fingered response to the Prime Minister.

And so foreign ownership goes straight back on the political agenda, a topic that makes National decidedly uncomfortable because it's on the wrong side of public opinion on this one.

Steven Joyce on The Nation personified that discomfort, as he tried to argue Labour was no better given the many thousands of hectares sold when it was last in government. Grant Robertson came out with a reply other Labour MPs would do well to learn: "The thing is we have learned our lesson". Labour would ban absentee landlords from buying more than 5ha of productive land.

But cometh the foreign land sale, cometh Winston Peters. And boy did Peters lay it on the line.

This was as definitive as Peters can be. With Paddy Gower on The Nation he said:

“Every New Zealander out there who's looking at this programme can trust my word on this. Not because I say it now, but because I've done it. We would not allow this deal.”

But here's the crucial bit. He went further.

Gower: "I need you to be really clear on this. You would withdraw an offer of supply or confidence to a National government if they were prepared to tick this off? You would say to them, 'You have to decline this sale— Your ministers have to decline this sale or you don't get us across the line'."

Peters: "You guys know what our position is. We are not selling our soul or this country's soul. And we are against this sale, and we will not be going into any arrangement with any party that think they can go on doing this. That's it..."

So New Zealand First will not go into ANY arrangement - presumably from coalition right down to supply and confidence - with National if it goes on DOING THIS, ie selling farms.

That's a pretty definitive line in the sand... or rather line in the paddock. It seems Peters and Craig might be about to try to out-tough each other on foreign ownership. It raises the question of how Key will respond and how flexible National might be on the issue. More, it makes that insurance policy Key took out on Peters look just a little bit risky.

Comments (22)

by Nick Gibbs on August 02, 2014
Nick Gibbs

So what? Winston will just abstain on confidence and supply and prop National up from the cross-benches.

by Stephen on August 02, 2014

But Nick, you know Winston wants more than the cross-benches. What's in it for him personally to do that. Baubles still count.

by Nick Gibbs on August 02, 2014
Nick Gibbs

Winston is outrageous enough to demand he be made PM outside of cabinet. Nothing is to ridiculous for him.

by Anne on August 02, 2014

Winnie has done it again. This time it's Key's bow he has shot across...

He's the ultimate "cunning old dog". 

by Wayne Mapp on August 03, 2014
Wayne Mapp

There is an interesting aspect to what winston actually said. Because the contract has already been signed, one would expect the rules at the time would prevail. And I think you can interpret his words that way. He says " ...think they can go on doing this."

That looks like a statement that is future looking, rather than applying to this sale. Winston, after all, respects precedent and the rule of law. But it is very clear he will want the law changed for the future.

By the way Shanghai Pengxin has done a very good job in putting a lot of extra capital into the farms they have already bought. They have developed a deep commercial relationship with a leading Maori Incorporation, which owns the Miraka milk powder plant. I suspect that they would also do this with Lochinvear. So one could expect much higher productivity out of this farm. In many respects Shanghai Pengxin is doing everything you expect from a serious investor who is building deep long-term relationships in NZ.

by Andrew Osborn on August 03, 2014
Andrew Osborn

The other way to look at this:

By cuddling up to Winston, Key gives him the kiss of death. A few previous Labour voters who might have voted for NZ First now don't. Thus pushing NZ First just below the magic 5% without materially affecting National's turnout, thus neutralising the remaining few % that Winston did manage to get.





by william blake on August 03, 2014
william blake

For once we agree Andrew, Key is te kiss of death.

by Katharine Moody on August 03, 2014
Katharine Moody

And now, Federated Farmers also putting a line in the sand;



by Tim Watkin on August 04, 2014
Tim Watkin

Nick, people seem to define "the cross-benches" a whole range of ways. Peters said he wouldn't do "any arrangement" (including propping up) and the language was very strong. With such strong words, could you "prop up" a government continuing to do "this" without some law change?

Wayne, it's early days but I was told that Lochinver has been well run, and Fed Farmers seems to have backed that up. Crafar Farms was not. So presumably it would be easier and more worthwhile to put extra capital into Crafar and generate improved productivity than with Lochinver. You'd think it might be easier to get a "substanstial and identifiably benefit" from Crafar as well. So you'd think it'd be harder to get over the OIO line if the OIO is more than a rubber stamp.

Also, while Winston did make that future promise he also promised to block this sale; so your point is a good one. With an agreement in place would that make NZ look rather Mickey Mouse?

by Richard Aston on August 04, 2014
Richard Aston

Winston on Nat Radio this morning said he would not only block future sales but buy back previous land sold to overseas investors, including James Cameron’s .


by Wayne Mapp on August 04, 2014
Wayne Mapp


Yes, I am sure you are righ about farming quality on Lochinvar, but I suspect Shanghai will spend money on such a scale that production will go inevitably up. They could forinstance covert part of the property to dairy. There is a portion of the sgtaion that is quite flat and would be readily convertible.

But more interesting will be the manouvering of winston on this. Political pressure from his prospective supporters during the election will demand this. So we could see some pretty ambitious statements from him.

He will want to wrest this issue off Colin Craig. It must sting like hell to be outflanked by Colin on an issue that traditionally has been so important to Winston. However, I reckon he will be able to successfully "steal" the issue off Colin.


Winston could only do that if he was the dominant party in govt. That won't be the case.


by Tim Watkin on August 04, 2014
Tim Watkin

The James Cameron comparison seems a bit of a red-herring, though not to Winston I guess. Labour, for example, wants to stop absentee landlords buying. Cameron isn't an absentee landlord but has become a citizen/resident (can't recall which). No-one usually complains about foreigners moving here, becoming NZers and buying land. It's the ownership by companies listed overseas or landlords elsewhere who take profits offshore that's the main concern.

Interesting Winston didn't say that.

by Tim Watkin on August 04, 2014
Tim Watkin

Exactly, Wayne. Hence my line about them trying to out-tough each other. As with the Maori comments from Whyte and Peters and Craig, this risks becoming quite unedifying quite quickly as they compete to be the toughest and own the issue.

But as for the substance of the farms... even if foreign companies can add value to a farm, how many are we prepared to lose to offshore owners before it's too many? Bill Rosenberg says farmland and forestey land combined, already 9% of NZ is in foreing hands? Are we ok with 10%? 20%? 40%?

by Katharine Moody on August 04, 2014
Katharine Moody

From another blog site on the background of fund raising for this aquisition initiative in Hong Kong;


Seems like a deal was inked and sold down in Hong Kong 6 weeks ago... with farm purchase costs at around US $76 million, so its not clear yet who the ultimate shareholders are proposed...
The plan seeems to be to convert/develop 6,000 ha of the land into dairy with initially 12,000 cows aiming for 4.5 million kgMS at a cost estimated to be say US $58 million.
do your own translation...
we got stuck on 洛岑牧场 says Los Cen ranch pasture, we think it means Central Plateau or similar
but here goes....
Dakang Pasture Farming to be raised 2.5 billion acquisition of New Zealand's two ranch
Published: 2014-06-18

Dakang pastoral on evening of June 17 announced that the company intends to not less than the price of 9.69 yuan / share non-public offering of not more than 259 million shares, raising not more than 2.51 billion yuan of funds. The net proceeds will be used for the acquisition of New Zealand's North Island and Los Cen ranch pasture, and the two ranch for technological transformation.

Specific acquisition program: Dakang Pasture Farming will acquire the stake Pengxin Group major shareholder of the new company to raise funds in Hong Kong, and the Hong Kong company will indirectly owns North Island pasture, and the Hong Kong subsidiary signed a purchase Los Cen ranch agreement. Through the acquisition of a Hong Kong company, Dakang will indirectly take ownership of livestock pasture North Island, and can be implemented for Los Cen ranch acquisitions.

Plans show a large stake in a Hong Kong company for health and animal husbandry (including North Island Ranch) of the purchase price of 890 million yuan, the transformation of the North Island pasture amounting to 360 million yuan; Los Cen acquisition price of 470 million yuan ranch, renovation amounted to 7.9 billion.

It is reported that North Island ranch pasture composed by 16. 2010 to 2014, annual pasture milk solids were 3,708,900, 4,144,400, 4,606,600, 4,090,300, 4,460,700 kg. Los Cen ranch in central North Island of New Zealand, by 10 land sizes of components. Los Cen mainly used for grazing pasture sheep, beef cattle, Dakang Pasture Farming plan for the future will be Los Cen ranch 6000 hectares of land converted into cow pastures, is expected to need to buy 12,000 cows. After the transformation is complete, expected annual production of milk solids to about 4.5 million kilograms.

Dakang Pasture Farming said that through this acquisition, the company will form a milk self-sufficiency, to get rid of dependence on third-party supply for the company to build a line from "pasture to table" a complete industrial chain closed loop.

Meanwhile, the acquisition of New Zealand pasture total of about 22,000 ha, with 4000 ha ranch entrusted with the management of the South Island, New Zealand allows the company to become the third largest ranch owners and operators. The next three pasture milk solids is expected to reach annual production of 15 million kg.
- brings it all together.... so there could be some amending of existing OIO approvals on the cards..
As an aside we had thought that Dakang Pasture Farming was a pig farm outfit
Jiang’s Pengxin Group, together with three of its wholly-owned subsidiaries, plans to buy 483.7 million new shares of Shenzhen-listed Hunan Dakang Pasture Farming for 7.96 yuan each, or 3.8 billion yuan, or $628 million, giving Pengxin a 55% stake, Dakang Pasture Farming said in a statement yesterday.
but this may refer to some other property...

by Nick Gibbs on August 04, 2014
Nick Gibbs


"people seem to define "the cross-benches" a whole range of ways. Peters said he wouldn't do "any arrangement" (including propping up) and the language was very strong. With such strong words, could you "prop up" a government continuing to do "this" without some law change?"

This is my point Winston will use the confusion to cross out his bottom line while maintaining he has done on such thing. And suggest that if you can't see it his way then it's your mental facualties that are impaired.

by Richard Aston on August 05, 2014
Richard Aston

Katherine, thanks for that information. The worrying phrase is "its not clear yet who the ultimate shareholders are proposed..."

But the intention seems clear, a direct ownership line from nz farm to milk products sold in China ie cut out the middleman, us.


by Wayne Mapp on August 05, 2014
Wayne Mapp


I suggest you are wrong in saying we are being cut out.

What Shanghai Pengxin will do is build their business relationship with Miraka. It seems clear to me that Shanghai Pengxin and Miraka are working in tandem on this.

Miraka will expand their milk processing facilities and Shanghai Pengxin will provide the milk and the ultimate market. That is actually a gain to NZ. It will boost milk poduction on 6,000 ha of new dairy land, the milk will be processed in a Maori owned diary plant, and Shanghai will organise the market. I fact don't be surprised if the farms are not part owned by Miraka, through their land incorporation.

Overll a big gain for NZ and Maori, using an imaginative belend of Chinese and Maori capital and entreprenueralism.

by Katharine Moody on August 05, 2014
Katharine Moody

Campbell Live tonight - from 16,000+ text votes - 94% say no to foreigners able to buy farmland here. It is going to be a defining issue of this election, I suspect.

by Andrew Osborn on August 05, 2014
Andrew Osborn

What do you expect from Campbell Live viewers?


by Tim Watkin on August 05, 2014
Tim Watkin

Wayne, Fran O'Sullivan has suggested limitations like requiring a JV if you want to buy land. Is that the sort of thing makes sense to you?

by Katharine Moody on August 05, 2014
Katharine Moody

@andrew - what are you saying - that they're a  well known xenophobic demographic? :-).

by Richard Aston on August 06, 2014
Richard Aston

Wayne, I admire your hopeful optimism. I have less faith in Chinese business practise.  I guess we will see over time.


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