Deborah Coddington: Nats fail to see the folly of selling valuable farm assets

Despite free trade agreements we have the power to protect strategic assets. Photo / Brett Phibbs

When two foes such as Green Party co-leader Russel Norman and Federated Farmers dairy chairman Lachlan McKenzie agree on something you'd think the National Government would sit up and take notice.

United against the takeover by China Jin Hui Mining Corporation (aka Natural Dairy) of Crafar dairy farms and other New Zealand farming assets, altogether worth $1.5 billion, Norman and McKenzie's protests are falling on deaf ears.

Unlike Labour, which blocked the sale of Auckland airport to Canadian interests, the Nats do not consider the 22 Crafar dairy farms, a large area of productive agricultural land, a strategic asset.

Norman is correct: this is a deliberate strategy by the Chinese to undercut Fonterra. McKenzie predicts it will inevitably lead to a huge drop in our standard of living, and all our incomes.

Why should the Chinese pay our prices for baby formula and long-life milk when we let them buy our land, our cows, our production facilities?

Business commentator Bernard Hickey has highlighted the dubious business reputation of May Wang, the New Zealand woman fronting the deal who, he says, owes thousands of dollars to creditors.

The Government could easily solve this problem. Despite its free trade agreements, we have the power to protect strategic assets. Who would quibble that our agricultural industry is still the backbone of the country?

Tenders close June 23, and receivers must get the best deal to settle the enormous debts the Crafar family couldn't meet. In this climate, finding a New Zealand farmer with $200 million isn't easy.

But here's an idea: we should invest some of our Superannuation Fund into buying the Crafar farms. Investing in a bit more of New Zealand would be a novel change for the fund's "guardians". We shop all over the world, it seems, when under our noses is prime agricultural investment.

Why shouldn't Kiwis purchase these farms, then incorporate them into our own Landcorp? But let's go further, because on paper, Landcorp, a state-owned enterprise, shows a six-month after-tax loss of around $20 million.

This is the result of an accounting discipline, which for farming purposes is a nonsense. Read the notes to the annual report and you'll see Landcorp is not operated by idiots.

Nonetheless, government interference requires Landcorp to deliver this year an $18 million dividend, a Herculean task. Governments, like corporate raiders, suck the life out of SOEs then sell off the shells. So what to do? This week, the Government ran a part-privatisation flag up the pole.

Don't panic, I'm not advocating selling the family silver. Those who wish to protect Landcorp from privatisation should look no further than the Air New Zealand model, which in 2001 needed a whopping $885 million taxpayer bail-out. But the Government kept only a three-quarter ownership, and in just two years our airline delivered profits of $165.7 million.

Landcorp needs no rescue package, but no government should be free to hoover its profits to squander on vote-buying. It's time to restructure this SOE.

Protect the estate subject to Maori claims, then take the farms (including newly purchased ex-Crafar holdings), have the Government keep a majority shareholding, and issue a public float giving mum-and-dad New Zealanders the chance to invest in non-voting shares. Give 'em a slice of Kiwi.

It's perfectly feasible to ring-fence these shares so they can never be sold offshore. Every international economy has the power to entrench shareholdings with specific disciplines so we can too, despite Jim Anderton's knee-jerk protests.

If National, once known as the cockies' party, can stand back and let Kiwi farmers be undercut by Chinese interests where will it all lead? Where the hell is Myrtle when you need her?

The Greens won't agree with me on part-privatisation of Landcorp, even a teensy bit to Kiwi investors.

But perhaps, with Labour's help, they might shame the Government into buying the Crafar farms for Landcorp. I'll settle for that.