Finance with Don Fraser Fraser Farm Finance

I’ve just had that sinking feel again. About 15 years ago I was vocal in print that we needed to be aware China was and would continue to buy up strategic assets in New Zealand. Not to mention an ever-increasing stake in our number one industry, dairying.

At the time I was ‘howled-down’ by many farmers, saying we needed the money coming in so they could sell their farms at a better price. So, I quietly shut up, which is unusual for me.

However, on June 6, 2019, in the business section of the ‘NZ Herald’ on page B2, a story was printed about China’s National Development and Reform Commission, named the NDRC for short. This commission “encourages” Chinese companies to buy foreign producers and set up production facilities overseas. And, I got that sinking feeling again. 

China has now openly stated their proposal to acquire assets, many of which are food-producing – and good on them – but more fool are we for being so willing to sell to them. I’ve banged on about a national plan for agriculture, let alone a national plan for New Zealand, but every time there’s an election we get new politicians trying to cement their position and the national interest flies out the Beehive window! 

And now China is offering to pay $246 million for Westland Milk, which has infant formula-making facilities. 

Currently in our dairying industry, China has a 39 per cent holding in Synlait Milk; a Shanghai-listed company called Yili owns South Canterbury’s Oceania Dairy; in Southland, Mataura Valley Milk is majority owned by China Animal Husbandry Group; and Yashili, one of China’s top infant formula makers, has a state-of-the-art infant formula plant at Pokeno.

China is looking at better food security for their nation, particularly infant formula after the melamine scare in 2008. If you’ve studied food securities, you’ll realise they’re on track to look after their nation only. There are only three good feeds between peace and a revolution.

During a war, attacking nations will try to cut off food supply to the country in question. Japan went through this in World War II and have never forgotten the lessons they learned. Thank goodness for Winston Peters, who has long been voicing caution about the sale of assets. If it does get really rough, at least NZ cannot sell Maori land, including farms, or the DOC estate.

So, what can we do? What is done is done and what is sold is sold – but we need a national plan to protect our key assets and our income streams from now on. New Zealand should retain ownership of land and only lease it to foreign interests.

This is fairly hard-hitting stuff and if it rings a bell with you, start talking about it and push for change. I’ve found if you work together you can move mountains, but on your own nothing happens.

Disclaimer – These are the opinions of Don Fraser of Fraser Farm Finance.  Any decisions made should not be based on this article alone and appropriate professional assistance should be sought.

Don Fraser is the Principal of Fraser Farm Finance and a consultant to the farming industry. Contact him on 021 777 675.