The Dominion Post | 27/05/2010
By TRACY WATKINS
Government-owned farming company Landcorp may bid for 16 big North Island farms at the centre of controversy over their potential sale to a Chinese-backed investor.
Landcorp chairman Jim Sutton said receivers for the farms were aware that Landcorp was doing "due diligence", although a final decision on whether to submit a tender was still to be made.
He said Landcorp was not looking to expand its business but there were unique circumstances surrounding the deal to sell the former Crafar farms, which went into receivership last year owing $200 million. The farms are in Waikato, Bay of Plenty, King Country, Whanganui and Taranaki.
Those unique circumstances included "reputational risks" to the New Zealand dairy industry and "New Zealand Inc", he said. There was concern in the wider community about the sale, and the Landcorp board was responding.
"Our undertaking due diligence ... is us responding to a level of public concern and expressions that we should be prepared to make ourselves part of a solution to this situation." Landcorp would probably act with with another New Zealand investor if it decided to tender.
Mr Sutton confirmed that shareholding Government ministers had been briefed – and that is likely to fuel claims of political interference. Chinese-backed Natural Dairy have done a deal to buy the farms but need Overseas Investment Office approval. Under the deal, the receivers can accept other bids.
Agriculture Minister David Carter angered Natural Dairy at the weekend when he told a National Party audience that the sale was unlikely. Natural Dairy lawyer Kerry Knight said the farms had been on sale for three years and Landcorp had shown no interest before.
"Now presumably through political pressure they are putting their head up. This is what Natural Dairy complain about ... it doesn't seem to be an even playing field. New Zealand companies can go to China and buy and do what they want."
A spokesman for Simon Power, one of the shareholding ministers, said a decision on whether to submit a bid was an operational one for Landcorp to make.
Mr Sutton suggested Landcorp was partly motivated by concern that few other investors could match the Chinese bid. "We're a big farming organisation and Crafar farms represents a big challenge and we think that we may be one of the few farming organisations in New Zealand capable of taking it on."
