China starts buying New Zealand dairies

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Although New Zealand’s Prime Minister John Key says less than 1 percent of the country’s farmland is owned by foreign investors, there is still concern about the recent sale of 16 dairy farms to Chinese interests. 

As part of the agreement, a company controlled by the Shanghai Pengxin Group will have milk products processed by a New Zealand-owned company. It is intended for New Zealanders to also operate the farms, according to The Associated Press.

If the $200 million sale is approved, Fairfax Media reports Chinese farmers could travel to Crafar Farms to learn dairying. Part of the deal includes an agreement for an on-farm training facility which could allow for 15 to 25 students per year with an additional 30 to 40 students at shorter, week-long courses.

As part of a Jan. 30 proposal to finalize the sale, the Crafar properties would be managed by the state-owned farming corporation for Pengxin, Landcorp chief executive Chris Kelly said. A decision on the latest proposal is expected Tuesday.

It could potentially have implications for U.S. dairy exports.

New Zealand is already the largest exporter of dairy products to China, and if China now starts buying farms in New Zealand that tie could become even stronger -- at the United States' expense.

China has become a lucrative market for dairy exporters because of its large population, increased affluence and desire to boost the protein level in people's diets. The Chinese people are a bit wary of dairy products produced in their own country because of the melamine scandal in 2008, and may be more confident in the products produced in New Zealand, Australia and the United States. For more information on the emerging Chinese dairy market, read “China matters!”

Meanwhile, in New Zealand, a consortium of local farmers are worried the sale will lead to more purchases by foreign investors with deep pockets. Investors from the United States and Germany have also purchased land in New Zealand, but those sales did not face heavy debate.

Xiaoming Huang, a professor of international relations at Victoria University said Chinese investments in New Zealand will continue as China is looking to spend its growing wealth globally. Huang doesn’t think the dairy purchase is something to be concerned about.

"The farm is a very small amount of land from the Chinese point of view," Huang said. "It doesn't much matter for them, so I don't think it's part of some huge plot. I think the system itself is more fragmented than we think."

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MA  |  January, 28, 2012 at 05:26 AM

Let's gear up for dairy exports!! That being said, let's do something about declining fluid consumption in this country.. Maybe we should start by deposing Tom Gallagher

john anderson    
midwest  |  January, 30, 2012 at 08:58 AM

To quote, "The Chinese people are a bit wary of dairy products produced in their own country because of the melamine scandal in 2008, and may be more confident in the products produced in New Zealand, Australia and the United States" BUT, if these dairies and eventually the processing plant themselves are purchased and ran by the Chinese, what's to say that the products they make won't be subject to question? Just like the melamine issues within their own country!! -- Just saying.......

Poland  |  April, 24, 2012 at 03:28 PM

Chinese people cares only about the stamp "Made in..." Made in NZ - it's a very good association. It is like "Made in Switzerland" for medicine or "Made in Germany" for beer. They don't care about the quality, only the brand name and place of origin matters. NZ has it all plus bonus - the knowledge and quality. They will take it all.

W C Mickelsen    
Utah  |  January, 30, 2012 at 09:41 AM

The Chinese have bought up a lot of the mineral business world wide and now mineral is costing more. They first purchase, then run prices low and put others out of business and then when the competition is gone then prices go way up. There may be more of a plan than first meets the eye.

VA  |  January, 31, 2012 at 04:46 AM

Replying to Utah's comment, maybe they took lessons from Cargill??

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