Fonterra chief questions China dairy investment

Fonterra chief executive Andrew Ferrier at yesterday's release of the co-ops half year financial results. Photo / Sarah Ivey

Fonterra chief executive Andrew Ferrier doubts there is an economic case for Chinese looking to invest in the dairy industry to buy their own processing plants in this country.

Chinese-owned Natural Dairy (NZ) Holdings told the Hong Kong stock exchange yesterday it had entered into an agreement to buy assets, including land, livestock and milk powder production plants in this country for $1.5 billion.

Ferrier today said the possibility that Chinese investment in this country could compete with Fonterra would depend on whether they wanted to put in their own processing assets, or whether they wanted to run their milk through Fonterra.

He doubted there was an economic case for them to buy their own processing plants in this country, with the Fonterra system far more efficient than anyone could replicate, he told Radio New Zealand.

"But again, we're getting ahead of ourselves. We have to get the facts behind this issue."

Thinking about long-term food security, New Zealand had to be awake to the fact many people were going to be interested in investing in this country, he said.

"Our government does have to be aware of the fact that there should be extensive foreign interest over time in investing in New Zealand farms, and we've got to think of this from a policy perspective."

Ferrier also said Fonterra was building farms in China, because the Chinese were asking it to do that.

"We're putting in farms to supply safe, healthy milk to our customers in China which complements the New Zealand milk that we're shipping to them."

The proposed purchase included the Crafar family's 22 dairy farms, put into receivership last October.

Receiver Michael Stiassny, of KordaMentha said his office was dealing with Chinese interests around Natural Dairy to see if they could conclude a transaction.

"They've approached us. We are in the process of putting the farms up for sale and we have engaged with these parties because the price that they're offering is one that interests us," Stiassny told Radio NZ.

A number of people had come to the receivers about the Crafar farms, "but this is the transaction we have been engaging on for some time, we haven't yet concluded it. We may not conclude it, but we are working with their solicitor to get it to a point where we can sign it, and then see whether it goes through OIO (Overseas Investment Office) or not".

"It's an attractive offer for us and we're doing what we can to bring it to a conclusion," said Stiassny .

There was no doubt that under the current political environment the OIO was operating at a far quicker pace than under previous administrations, Stiassny said.

- NZPA