The Crafar farms and our strategic advantage

Most dairy farmers must hate the Crafars. I know that, like the Police, they've got that 'closed ranks' thing going on, but in private they must be cursing that family. They've probably done more to destroy the carefully constructed image of the New Zealand dairy farmer than all the tree-huggers put together. The Crafars were, after all, the epitomy of farming success. Once New Zealand's largest privately owned dairy operation, they have been reduced to fighting eviction from their farm (a court date has just been set) while their assets are liquidated. Their holdings were so enormous that who will buy them is causing handwringing in the highest places.

Now I don't actually hug trees but I do like them a lot, so I was surprised to find myself agreeing with a range of people opposed to a sale to Hong Kong listed (and Cayman's registered) Natural Dairy (NZ) Holdings. These include Federated Farmers' Lachlan McKenzie, Fonterra's Henry van der Heyden (although the position does seem hypocritical from an industry that is buying up land in South America and opening farms in China as fast as it can) and ex-ACT MP Deborah Coddington, .

To me it just seems stupid to sell-off large swathes of productive land to overseas interests,whether they are Chinese, American or Australian. Unlike Treasury secretary John Whitehead I don't see overseas investment as fundamentally beneficial for New Zealand. I see a dimunition of sovereignty, expatriation of profits to other countries and the maintenance of artificially high land prices. The servicing of the resulting gargantuan farm debts is driving the intensification of dairy farming, with associated over-extraction of water and increased run-off pollution. It is also what is driving the corporatisation of farming, with young farmers increasingly incapable of buying their own farm.

No one seems quite sure what Natural Dairy (NZ)'s game is. Fiona Rotherham in The Independent has questioned the murky financial backing and the 'patchy' business backgrounds of the two front people, Jack Chen and May Wang. She puts this in the context of a Hong Kong propensity for 'pump and dump' stock manipulation schemes, where people talk up a company through grand public announcements and then exit the stock when the price soars. No one is saying that this is what Natural Dairy (NZ) is doing, just that there are some questions that need answering.

Other opponents see a different motive. Henry van der Heyden and Greens co-leader Russel Norman have mentioned food security and there is no doubt that is something that the Chinese Government takes very seriously. According to China’s Ministry of Land and Resources China lost 8 million hectares or 6.6 percent of its arable land in the last decade through soil erosion and salinization. Which is why in 2008 China was drafting a policy to encourage agricultural companies to purchase farmland abroad. Much of this has been in Africa, where the practise of 'land grabbing' is seen as a form of neo-colonialism,since the intent is not to assist local economies to develop but simply to secure resources.

Whether a 'pump and dump' or a 'land grab', New Zealand needs to look very carefully at this proposed sale. Which is why I was pleased to read that Landcorp is considering entering a bid. Given the poor environmental practises of the Crafar's, however, it would be good to see something more regenerative on that land than intensive dairying. Landcorp did some research a few years ago that indicated that organic dairy farming has similar profitability to conventional, although they didn't look at organic sheep and beef, which is where the biggest premiums are. Even without increased profit, the case for conversion is compelling given the environmental gains from organic farming. After the Crafars, it would be poetic to see Landcorp turn the properties into organic R&D dairy farms, and it would be of much greater strategic advantage to New Zealand.

(from my Waikato Times column 4 June 2010)