The 13,800ha Lochinver Station in the Taupo region. Photo / Supplied
The 13,800ha Lochinver Station in the Taupo region. Photo / Supplied
‘Surprised’ bidders to rethink options after ministers reject offer.
Federated Farmers said it welcomed the Government's decision to decline the sale of Lochinver Station, near Taupo, to China's Shanghai Pengxin Group.
Government ministers Paula Bennett and Louise Upston said earlier they had gone against a recommendation by the Overseas Investment Office and turned down an $88 million bid by Chinese billionaire Jiang Zhaobai's flagship firm to buy the station.
The Overseas Investment Office had recommended the sale to Chinese-owned Pure 100 Farm be accepted in what Associate Finance Minister Bennett described as a "finely balanced" decision.
President William Rolleston said Federated Farmers supported positive overseas investment in New Zealand's farming system.
"New Zealand absolutely needs foreign investment, but there has to be clearly demonstrated benefit to the local and national economy.
"This was not proven here and we believe the Lochinver decision reinforces the importance of changes made to the Overseas Investment Office rules over recent years.
"As Lochinver is so highly regarded in farming circles this was always going to be a tough test to pass and because the station is three times the land aggregation trigger level for foreign investment, it had to be a test that was carried out thoroughly and confidently," Rolleston said.
In 2010, the Government tightened the rules around foreign ownership by way of an "economic interests" factor in the Overseas Investment Office's consideration. A "substantial and identifiable benefit" test was also incorporated into the overseas investment decision framework.
It's the first time ministers have rejected a bid to buy a significant landholding in New Zealand since the rules were tightened in 2012 during the Crafar Farms decision to require the OIO to assess whether a foreign buyer could offer more than a New Zealand buyer.
The Shanghai Pengxin subsidiary, Pure 100 Farm, said it had spent $18 million on improving the productivity and environment of the former Crafar farms.
"We are surprised and extremely disappointed with the decision and will be considering our options," it said.
The owners of the station, the private Stevenson Group, said it was disappointed by the process and the outcome.
"We are unclear as to why this property is different to the many others that have been approved through the OIO process, given the obvious benefits both to the farm and to Stevenson Group," it said.
"Beyond this transaction, this decision will have significant economic ramifications for the New Zealand economy, particularly in the areas of international relations, uncertainty of foreign investment and rural land prices."
Stevenson chief executive Mark Franklin said: "At this stage I am not sure we agree with the assumptions used or the way the criteria has been applied.
"Certainly the assumptions that have been used do not reflect our reality - we carried out extensive marketing of the farm and the hypothetical New Zealand purchaser did not come out of that process."
Key: China will accept rebuff
Prime Minister John Key. Photo / Dean Purcell
Prime Minister John Key says the decision to reject a bid by the Chinese-owned Pure 100 Farm to buy Lochinver Station does not send mixed messages about New Zealand's approach to foreign investment.
Key said the OIO had made it clear its recommendation was a "line call", and he was certain the ministers' decision that it was not of enough benefit to New Zealand was sound.
Key was in Christchurch with the Chinese Ambassador announcing new flights to China when the news broke. He said the ambassador had not raised it with him.
Although a Chinese embassy official told 3 News the embassy was "disappointed" at the decision Key did not believe it would damage New Zealand's relationship with China.
"The Chinese are pragmatic, they can understand we've got the law, we apply the law," he said. "We expect the same treatment when we go into China."
Key denied it was politically driven because of a backlash over foreign buyers of New Zealand land. The decisions had to be made within the criteria stipulated in the law and were open to being overturned under judicial review if they were not.
"They can't think about public opinion, they have a legal test."
In its report to ministers, the OIO recommended the deal be approved, but conceded it was "finely balanced".
It said the benefit of the sale "was likely to be "substantial and identifiable."
It listed the creation of contractors' jobs, increased exports from the conversion of forest and wildling pine land to dairy, and processing of the timber felled.
However, Bennett said that while the conversion of the land into pasture would create contractor jobs, it would be only a short-term benefit.
Other gains were not significantly greater than a local buyer would be likely to provide. She said the station was well run, which made it more difficult for a foreign buyer to show they could add more to the New Zealand economy from it.
