Mood of the Boardroom: We must keep hold of our competitive advantage

Henry van der Heyden. Photo / Paul Estcourt

HENRY VAN DER HEYDEN
FONTERRA

Henry van der Heyden wants to start a public debate over just who should own New Zealand's prime pastoral land.

The Fonterra chairman stresses low-cost pastoral agriculture is New Zealand's point of difference - "we have to be careful we don't give away our competitive advantage or we will pay the price".

Clearly New Zealand's competitive advantage, as far as the dairy co-operative is concerned, is integrally tied to the ownership of the pastoral land-base.

But unlike many other countries that use strong "national interest criteria" to "protect" their major industries from potential offshore marauders, New Zealand's foreign ownership rules are designed to further a free-market environment where the welcome mat is rolled out to foreign investors

Van der Heyden acknowledges that any no-go decision to slap strong "national interest" criteria on pastoral land, would be a "decision made around a Cabinet table".

But he questions why land is not seen as a strategic asset given NZ's temperate climate and its soil and water resources.

"Why shouldn't it be under NZ control and ownership?"

He points to what happened to the banking industry after all the major trading banks passed into Australian ownership. "They are now controlled from Melbourne and Sydney."

The issue sprung into public prominence with the bid by Hong Kong backed interests to buy 16 dairy farms from the Crafar receivers.

State-owned Landcorp is now in the process of mounting a counter-bid to try to keep the farms in New Zealand ownership.

Van der Heyden isolates two competitive threats to Kiwi dairy farmers. The first threat is if other nations' farmers become able to grow grass and produce milk more cheaply that NZ farmer.

The other is adopting farming practices that make NZ uncompetitive.

Farmers were yesterday voting on Fonterra's capital structure plans: Sir Henry said he would be surprised if the share trading among farmers option did not get major support