Friday, 20 April 2012

Wailing banshees and the Crafar Farms saga

While fumbling down the street this morning, walking into all and sundry while trying in vain to pin my Chinese-made ANZAC poppy to my lapel – succeeding only in repeatedly stabbing myself in the chest before losing the pin in the gutter – I was reminded that today is the day the Government plans to announce the sale of 16 former Crafar Farms to Chinese conglomerate Shanghai Pengxin.

A large section of society is howling that we are “selling out New Zealand” and “bowing to China”.  People are being swayed by the slightly jingoistic argument that the Government is selling “our” land to uncaring foreigners.

But let’s look at the reality of the situation behind the screeching slogans and nationalistic fear of overseas investment; let’s look at it without the knee-jerk “tenants in our own land” argument and without invoking the Yellow Peril.

Crafar Farms went into receivership in October 2009 – owing some $200 million to Westpac, Rabobank and PGG Wrightson Finance – and, by all accounts, were poorly managed financially and physically.  Using his existing land as leverage, Allan Crafar was rapidly expanding his holdings at a time when the recession was biting and when Fonterra had dropped the prices it was paying for milk, sending the Crafars into receivership.  On top of the massive fines levied for pollution and animal mistreatment, one could guess things were going to end badly no matter what happened.

So here we have Australian banks left holding the bag with a $200 million hole in it.

The banks passed the debt on to receivership company KordaMentha, which was actively seeking buyers to take on the farms and thereby relieve it of the debt.  At no stage was this “our land”.  It is private land and, before going into receivership, Crafar himself said: "You'll get vultures around wanting to buy up one or two of the good [farms]."  He also stated clearly that he was holding out to sell all 22 farms in one hit, and was in talks with both Australian and Chinese companies.  Before the receivership took effect – and before the Government got involved – Allan Crafar was looking to sell the entire whack to foreign owners and actively declined selling individual farms to New Zealand investors.  This was his right as a private landowner.

But, nonetheless, the banks took the land and – as the new landowners – sought their own buyer.  The banks are merely trying to plug the holes in their books – as Allan Crafar was doing with his.  So they looked around and found a Chinese buyer willing to pay the price.  The Overseas Investment Office then gave approval to proceed and, on that advice, the Government rubberstamped it.

And that’s when the banshees began to wail.

Tenants in our own land!

Selling out NZ to the highest bidder!
Selling our children’s future
All the money will be funnelled offshore!
Shame on you Prime Minister!

Despite the fact that this is a private land sale, and that Crafar himself was heading down the same route, the issue got a lot more public attention.  It was seized upon by Left-wing bloggers and far-Left political Parties who stoked the negative public opinion by claiming that the National Government was selling out New Zealand.  The Labour Party has also called on the Government to reject the deal – but is much more cautious in its language because it recognises that the land is open to be sold to foreigners.  Labour’s main concern is around the benefits of selling to this particular buyer, and not the actual selling of the land itself – which is a reasonable position to take and much more restrained than some.

The fact still stands, however, that this is a private sale – it is no more “our land” than it was when Allan Crafar owned it.  Not only that, but the cries of selling out New Zealand ring hollow when you consider that it currently isn’t New Zealand-owned land.  Rather, it is owned by Australian receivers – leaving the Government in the unenviable position of having to sign the whole thing off without actually have any title to the land.

Some suggest rejecting the Chinese bid and instead considering one from the consortium headed by Sir Michael Fay.  Fay presided as a ’consultant‘ during the biggest stock market crash in New Zealand history; sold New Zealand assets in the 1980’s and 1990’s to enrich himself and his cronies; was twice investigated for insider trading; was fined $20 million for dodgy dealings; and currently lives in Switzerland while his New Zealand companies siphon all their money overseas.  Fay’s bid is $30 million less than the Chinese bid and some people realise he would buy it, sell it to the Chinese at a lower price than the receivers have asked, and keep the profits offshore for his own enrichment.  Yet these same people think Fay is the better option – which plays directly into the hands of the biggest New Zealand crook of them all.  Fay is not a reasonable option.

Another suggestion is that the Government reject the deal outright and either direct the receivers only sell to a New Zealand owner, or compulsorily take the land back into New Zealand ownership.  There are two problems.  First: if the current bid is rejected, what happens next?  The receivers are under no obligation to sell to a New Zealander and the Government has no way in which to dictate the sale outside of rejection.  If the receivers then approached the Government with a US buyer, the Government must then reject that offer or be accused of racism.  So we hold out and reject every offer – thereby causing the receivers to take a lower New Zealand bid – meaning the Government has effectively forced a private company to take a loss on its own private holdings.  That doesn’t sound like an appropriate response.  I’m sure that those pushing for this solution might kick up a fuss if the Government took a similar approach to private citizens’ sale of their own property – ie: forcing you or I to sell our house to a New Zealander for less than it’s worth, rather than to a German who is offering to pay the full value.  As for the Government retaking this land into New Zealand ownership – well, that just amounts to theft.  Plain and simple.  Unless they pay for it, which I don’t think we are in a position to do.

Unfortunately it would appear we have our hands tied.  While I’m sure John Key and his team are pretty pleased to sell to these Chinese investors, the reality is that they don’t really have a choice.  I don’t like it much – Hell, I would love the land to stay in New Zealand hands.  But I’m a realist and, as such, I don’t subscribe to the bullshit being propagated by those with an axe to grind against the Government or those who dislike the idea of foreigners buying New Zealand land.  The xenophobic and borderline dishonest ‘the Government selling us out‘ and ‘selling off our land’ arguments against this sale are worse than the sale itself.  Meanwhile, those expounding and supporting them are doing so for political expediency – forsaking reality and replacing it with their own version of events.  What’s worse is that people actually believe them because it plays into their fears.

Besides, if my Chinese-made ANZAC poppy is anything to go by, the whole fucking thing will fall apart anyway.


  1. I recall something to this effect about a mass buy up of Montana by the Japaneses in the late 80's early 90's with Crichton writing a book. Nice to see that other countries have this problem too.

  2. Every (or at least most) countries deal with foreign investment. It isn't unique to NZ.


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