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."