New Zealand’s government has decided to block the $56 million purchase of local farm Lochinver Station by Chinese company Shanghai Pengxin.
The government said it was not satisfied that the sale of the Lochinver Station would be of substantial benefit to New Zealand, which is a key requirement for a big land purchase.
The move comes after the body that oversees bids for sensitive assets in New Zealand had approved the sale.
There have been growing concerns about foreign land ownership in New Zealand.
Those fears were stoked after Shanghai Pengxin New Zealand, which is a unit of the Chinese parent firm Shanghai Pengxin, bought 16 dairy farms in New Zeland in 2011.
China is New Zealand’s biggest market for many dairy and meat products. Dairy products are also New Zealand’s biggest export.
Shanghai Pengxin said in a statement that it was “surprised and extremely disappointed with the decision and will be considering our options”.
The 13,800-hectare Lochinver farm is located in North Island and is used to breed sheep, as well as cattle for beef and dairy products.
The Chinese government has encouraged its companies to look to overseas markets to meet the demands of its growing consumer class.
Stevenson Group, the company selling the farm, said it was also disappointed by the outcome after a 14-month process.
“We are unclear as to why this property is different to the many others that have been approved through the Overseas Investment Office process, given the obvious benefits both to the farm and to Stevenson Group,” the compny said in a statement.
New Zealand dairy giant Fonterra said today it plans to take a 20% stake in Chinese infant food manufacturer Beingmate.
Fonterra will also spend $555 million on expanding its milk powder making capacity in New Zealand.
Beingmate is one of China’s biggest milk processors.
The tie-up would help create a global supply chain aimed at China’s market using Fonterra’s milk manufacturing partners in Australia and Europe.
It would also help Fonterra increase its share of China’s large and lucrative infant diary food market.
China relies on New Zealand for almost all its imports of milk powder.
Fonterra plans to take a 20 percent stake in Chinese infant food manufacturer Beingmate (photo Fonterra)
If successful, the new partnership between Beingmate and Fonterra would see the Chinese company set up a joint venture to buy a Fonterra plant in Australia.
It would also see Beingmate distribute Fonterra’s popular Anmum brand on the mainland.
Fonterra’s chief executive Theo Spierings said the partnership would be a “game changer” and that it would provide Fonterra with “a direct line into the infant formula market in China”.
He also said Fonterra would work with Beingmate “to evaluate mutual investments in dairy farms in China”.
“The partnership will create a fully integrated global supply chain from the farm gate direct to China’s consumers, using Fonterra’s milk pools and manufacturing sites in New Zealand, Australia, and Europe,” the company said.
Fonterra said the infant formula market in China was worth about $15.05 billion today and that it would be worth some $27.5bn by 2017.
“This growth is driven by increasing urbanization, higher disposable incomes, a preference for premium brands and relaxation of the one-child policy,” said Theo Spierings.
China puts a premium on imported dairy food products after a tainted milk formula scandal in 2008 killed six babies and made some 300,000 infants ill.
Following that, a food scare related to Fonterra products last year saw China ban all milk powder imports from New Zealand for a period of time.
Fonterra, which is a farmer-owned co-operative and the largest exporter of dairy products in the world, said it had found a bacterial strain in some of its products that can cause botulism.
Testing later found there had been no problem with the company’s diary products.
Fonterra was nevertheless fined $256,675 over the food scare, which led to a global product recall.
Fonterra, New Zealand’s main dairy exporter, has found a strain of bacteria causing botulism in some of its products, including infant formula and sports drinks.
It has led to a global recall of up to 1,000 tons of dairy products across seven countries, including China.
Fonterra has not named the eight companies affected.
Botulism is one of the most dangerous forms of food poisoning, often leading to paralysis.
New Zealand’s Ministry of Primary Industries confirmed on Saturday that the tainted products included infant formula, sports drinks, protein drinks and other beverages.
The bacterium was found in three batches of Fonterra’s whey protein used in infants’ Nutricia Karicare follow-on formula, Fonterra said.
The whey product was produced in May 2012, with a dirty pipe at one of its processing plants in Waikato responsible for the contamination, the company said.
Fonterra has found a strain of bacteria causing botulism in some of its products
Nutricia has locked down all five batches of formula believed to contain the tainted product and says none of its product was actually sold.
Fonterra – the fourth largest diary company in the world – says it has urged its customers to urgently check their supply chains.
“We are acting quickly,” Fonterra chief executive Theo Spierings said.
“Our focus is to get information out about potentially affected product as fast as possible so that it can be taken off supermarket shelves and, where it has already been purchased, can be returned.”
The countries affected beside New Zealand include China, Australia, Thailand, Malaysia, Vietnam and Saudi Arabia.
Fonterra said there had been no reports of any illness linked to the affected whey product.
The dairy industry powers New Zealand’s economy, with the country exporting up to 95% of its milk.
Fonterra is a major supplier of bulk milk powder products used in milk formula in China.
Chinese consumers have a special interest after a tainted milk formula scandal in 2008 killed six babies and made some 300,000 infants sick.
The Chinese authorities have already ordered domestic importers to recall all milk products that could be affected.
Fonterra’s chief executive, Theo Spierings, plans to fly to China on Saturday to deal with the fall-out.
Botulism is a rare paralytic illness caused by a toxin which is very poisonous to humans.
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