Shanghai Pengxin, the Chinese company which spent the last 18 months waiting for finalÂ approval to buy a large New Zealand farm, says it is delighted the Supreme CourtÂ has refused to allow a further legal appeal by iwi (an aboriginal group), and that there is now no obstacle to theÂ purchase being concluded before the end of the year.
Describing the purchase of Crafar Farms as Â “an unbelievably protracted process”, the company saysÂ it neverÂ considered giving up at any stage, and looks forward to a positive relationship with the dairyÂ industry and the local communities in which it will shortly be a corporate dairy farmer.
â€œOver time, we hope we will demonstrate many benefits in New Zealand and China workingÂ together and maximising the opportunities available for New Zealandâ€™s largest industry inÂ China,â€ says the company.
The purchase will be in the name of Milk New Zealand Holding Ltd, a subsidiary of ShanghaiÂ Pengxin. The farms will be managed by a joint venture company, Milk New Zealand FarmÂ Management Ltd (â€œMNZFMLâ€) a 50/50 joint venture with Government-owned Landcorp,Â which will be the managing partner.
Landcorp chief executive Chris Kelly says the next stage is a period of due diligence whereÂ an inventory of the physical assets of each farm will be checked and the herds reviewed.Â The various management contracts and share-milking contracts which the company will takeÂ over from the Receiver, will be activated before the transaction is settled.
â€œAll going well, we expect to take over the running of all the farms early in December,â€ saysÂ Chris Kelly. “Our early priority will be to begin the upgrades necessary if we are to meet ourÂ increased production targets and to commence the environmental upgrades which haveÂ been agreed with the Overseas Investment Office. We are also required to establish a dairyÂ training school on one of the properties so will be involved in planning that.â€
Chris says MNZFML intends to spend some $15.7 million on the properties in the firstÂ three years.
For the time being, Milk New Zealand will continue to supply the milk production from itsÂ farms to Fonterra.
But , with finality of ownership now achieved, Milk New Zealand Holding is able to makeÂ progress on its options to process milk production from the farms and create a range ofÂ high value consumer products for sale in China. Spokesman Cedric Allan said this may be aÂ contract arrangement with a New Zealand supplier or a joint venture with a New ZealandÂ company. Milk New Zealand Holding has set aside a marketing budget of $100 million inÂ China in the first five years.
Final steps will now be taken to form MNZFML and appoint directors and a chairman, whoÂ will be announced shortly.
Cedric says Milk New Zealand remained interested in acquiring further dairy farms if theÂ right opportunities arose, and is still prepared to continue discussions with the iwi wishingÂ to buy two of the Crafar farms.
â€œWeâ€™re prepared to talk, but it has to be on a commercially realistic basis. We have noÂ interest at all in conducting negotiations through the media.
“We are inviting a Maori business delegation to visit China this year talking about moreÂ opportunities with wider iwi.
“Milk New Zealand will set up a head office in Auckland soon.”