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.
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