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New Zealand gives nod to China firm to buy farms

A Chinese investment company won approval for a second time on Friday to buy 16 dairy farms in New Zealand, after a court challenge forced the country's government to review its original decision in favour of the purchase. Gyles Beckford reports for Reuters. April 19, 2012 -- Shanghai Pengxin was given the green light to buy the farms for around NZ$200 million ($163 million), after officials imposed strict conditions relating to investment in the land and protection of sensitive sites. New Zealand is the only Western nation to have a free trade agreement with China, its second-biggest export customer behind Australia. Chinese firms already have significant holdings in New Zealand, but the sale of rural and coastal land to foreign interests is a sensitive issue in a country where agriculture dominates the economy. New Zealand is the world's largest exporter of dairy goods. "The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial," Associate Finance Minister Jonathan Coleman said in a statement. Shanghai Pengxin had said opposition to its purchase of the farms was partly motivated by anti-Chinese sentiment, and had warned that a refusal would likely deter other foreign investors. It has promised to upgrade the farms, train New Zealanders to work on them, invest in a New Zealand processing plant and provide money to market the products in China. Critics of the sale have questioned what expertise the Chinese group has in farming in New Zealand, where agriculture accounts for around half of economic output. A rival New Zealand consortium, whose lower bid was rejected, has said it still wants to buy the farms and keep them in New Zealand hands. The rejection of its bid led to the legal challenge. The farms have been on the market for more than two years after the original owner failed to repay bank loans. Chinese firms already own New Zealand dairy processor, Synlait, and hold key stakes in listed agribusiness PGG Wrightson Ltd and appliance maker F&P Appliances Ltd . Foreign investors are free to invest in New Zealand urban property, but need official approval for purchases of anything but small parcels of rural land. The biggest buyers of New Zealand rural land in recent years have been from the United States, Britain, Europe and Australia.