Editorial: Lochinver conundrum has knock-on effects

The country's biggest meat processor, Silver Fern Farms, was bought by Chinese investors earlier this week. Photo / John Stone

Opinion

While blocked sale prevents foreign ownership it also has ramifications for value of all farm property.

The blocking of a sale of Lochinver Farm will be welcomed by those with a narrow, not to say xenophobic, view of the national interest.

It prevents the "loss" of this farmland to foreign ownership but it also prevents the owners investing the capital from the farm into another venture that quite possibly offers a greater return to them and the New Zealand economy.

The ministers who over-ruled the Overseas Investment Office's recommendation to approve the sale to China's Shanghai Pengxin Group offer the excuse that the proposal did not offer more employment than a New Zealand buyer would provide.

The problem with that rationale is there appears to be no New Zealand bid for the property.

The Government's intervention has reduced its value at a stroke, effectively confiscating some of the Stevenson Group's rightful property. The damage does not end there.

The decision will reverberate in the market for all farm property, reducing its value at a time dairy earnings are in the doldrums. Odd, therefore, that the decision is welcomed by Federated Farmers.

It was clearly a loss of political nerve. After the sale of the Crafar farms to the same Chinese group a few years ago, and perhaps also the Chinese buy-in to the country's biggest meat processor, Silver Fern Farms, this week, the Government feared an outcry over such a large and lovely estate. Lochinver, it decided, was a step too far and many will be relieved.

But this is not how nations attract capital and prosper.