Chinese Developer May Buy Crafar Farms in New Zealand

Shanghai Pengxin Group, a Chinese property developer and owner of agriculture and mining ventures, is seeking to buy 16 dairy farms in New Zealand after the government rejected an earlier bid by another Chinese company.

Shanghai Pengxin will apply to the Overseas Investment Office by the end of March, Chairman Jiang Zhaobai said in a statement yesterday posted on the website of KordaMentha, the farms’ receiver. KordaMentha, which took control of the farms more than a year ago, accepted the offer, it said.

The bid for the assets, known as the Crafar farms, renews debate over foreign ownership of New Zealand’s farm and dairy industries. New Zealand farmer groups have voiced objection to the sale of farmland to buyers from outside the country on the grounds that such sales weaken control of industries accounting for about a third of New Zealand exports.

“We have made proper arrangements for financing the purchase of the Crafar farms, if approved, and also financing our subsequent development plans,” said Jiang, who along with his brother ranked 293 among the 400 richest Chinese by Forbes magazine in 2010. The company, which didn’t disclose financial terms, will release plans for the properties when it submits the application, he said.

No ‘Good Character’

New Zealand’s government last month rejected a bid by China’s Natural Dairy (NZ) Holdings Ltd. and UBNZ Funds Management Ltd. to buy the 16 North Island properties after the application failed to meet “good character” criteria.

The government in September gave ministers greater power to quash sales of large farm blocks and other sensitive land. The tightened rules require buyers to show how an acquisition benefits the nation’s economy.

“We will bring substantial benefits to New Zealand, some of them, perhaps, outside the dairy industry,” Jiang said.

Shanghai Pengxin owns a 930 hectare sheep breeding farm in China’s Shandong province and purchased a majority interest in a soybean and corn farm in Bolivia for $20 million in 2005, according to the statement.

New Zealand Prime Minister John Key, who faces an election this year, has also expressed concerns about foreign ownership, saying he doesn’t want New Zealanders to be tenants in their own country.

“We say that they don’t bring benefits to New Zealand at all,” Tony Bouchier, spokesman for lobby group Save the Farms, told Television New Zealand in an interview today. “We are world leaders in dairy and they bring nothing.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE