Farmers say China-backed firm will face steep prices

A Chinese-backed company seeking to buy up to 100 farms in the South Island would have to pay high prices and could face opposition from farmers, Federated Farmers says.

Natural Dairy, which is seeking to buy 29 farms previously owned by the Crafar family, is also trying to buy farms in Otago and Southland and build a dairy factory in Southland.

Southland Federated Farmers president and dairy farmer Rod Pemberton said there were few dairy farms for sale in the south, and for Natural Dairy to buy up to 100 would mean paying premium prices.

He said farmers had previously been burned when a trust backed by Dubai interests agreed to buy a number of farms before the deal fell over.

"They will want to see some cash on the table before committing themselves," he said.

Federated Farmers' Southland dairy chairman, Vaughan Templeton, said southern farmers were not that supportive of overseas companies owning land, and he believed their loyalty to Fonterra was getting stronger.

Greg Roberts, a consultant for Natural Dairy NZ, would not say if the firm had purchase contracts on any farms, but sources said it had indicative interest from the owners of farms milking about 30,000 cows.

Roberts declined to say where the potential dairy factory sites were, but sources have said three sites had been chosen.

Roberts said the factory would be medium in size, similar to the Open Country Dairy plant at Awarua, near Invercargill, which is supplied by 94 farms and handles 200 million litres of milk from about 50,000 dairy cows a year. In comparison, Fonterra's Edendale factory can handle 15 million litres of milk a day.

Natural Dairy spokesman Bill Ralston confirmed the company's interest in the South, but described the approaches to farm owners as "initial due diligence", with no commitment or sale agreements until the company received a ruling from the Overseas Investment Office (OIO) on its North Island purchases.

Ralston said the OIO has had an initial assessment, but asked for more detail on Natural Dairy's business case. Once the final documentation was lodged, it would take 50 working days for the application to be assessed.

Last week May Wang, a New Zealand citizen and director of UBNZ Assets Holdings in which Natural Dairy owns 20 per cent, issued a statement defending her company from criticism and opposition to foreign ownership of New Zealand farm land.

She said UBNZ Assets Holdings, a New Zealand company, would own the farms, and was initially seeking approval to buy 29 Crafar family properties placed in receivership.

Should the OIO approve the transaction, Hong Kong-listed Natural Dairies would buy outright UBNZ Assets Holdings. Wang, in Asia raising $1.5 billion for the project, said there was enough capital to buy the Crafar farms.

Ralston said long-term plans were to build dairy factories in the central North Island and another in Southland. One factory would manufacture longlife milk and the other infant formula, with Natural Dairy planning to use its packaging and distribution expertise in 24 Chinese cities.

NATURAL DAIRY

* Seeking approval to buy 29 Crafar family properties placed in receivership.
* Looking at buying 100 farms in Otago and Southland.
* Planning to build a dairy factory in Southland.
* Spokesman Bill Ralston says Natural Dairy has approached farmers for "initial due diligence".

- OTAGO DAILY TIMES