Germans buy 3314ha of dairy land

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FOREIGN INVESTMENT: German investors have bought 3314ha of dairy farms

Stuff.co.nz | 01/02/2011

JONATHAN UNDERHILL AND JOHN HARTEVELT

German investors have splashed out more than $100 million in a month buying thousands of hectares of dairying land in the South Island.

The Overseas Investment Office published its decisions yesterday on the sale of sensitive farmland during December. In the middle of the same month that it approved 3314 hectares of dairy and dairy-conversion land for sale to German buyers, the office was directed by Finance Minister Bill English to start using two new tests with "high relative importance".

However, the tests took effect only from January 13, and would not have affected many of the latest sales because they involved blocks of less than 1720ha.

Together, the assets amount to just under half the size and value of the 16 Crafar farms in the North Island, which are under offer from a Shanghai conglomerate.

The biggest German investment group to gain OIO approval was DAH Beteiligungs, a holding company owned by the family of Dietmar Hopp, who helped found the business software giant SAP in 1972. The company was cleared to buy five farms totalling 1468ha valued at $53.2m.

The applications to buy the farms are in the name of Mr Hopp's son Daniel, managing director of DAH Beteiligungs.

A second group, listed as Aquila AgrarInvest, D/S Neuseeland Milchfarm Investitions and Alceda Star, won approval to acquire five farms amounting to 1304ha for $37.8m. Two further farms, of 544ha in total in Canterbury, were cleared for sale for $18m to German and Swiss-German investors.

In the five years till the end of August last year, the OIO approved only two solely German purchases of agricultural land.

Mr English has said foreign investment can make a positive contribution to New Zealand through increased jobs, capital and access to export markets. But since controversy over a failed bid by Hong Kong investors to buy the 8615ha Crafar Farms, the Government has acknowledged "genuine public concerns" over some foreign investment in farmland.

Yesterday, a spokesman for Mr English said he would not comment on the December rulings, but added that the new rules would create "an appropriate balance" for decisions made this year.

Labour leader Phil Goff said the approvals reflected his party's concern that foreign investors would increasingly want to buy up New Zealand land to control food supply channels.

"That is not in our interests as a country."

Land should stay under New Zealand ownership unless there was clear evidence that a buyer would bring new jobs and grow the economy, Mr Goff said.

The German deals approved by the OIO were structured by local farm syndication and management group AgInvest.

Director Cliff King said the syndicates typically ran for five to seven years, after which the properties were either sold or taken over by the local managers and some of the investment groups.

The latest group of syndicates would spend a combined $12.7m on farm upgrades, increasing production by between 20 and 70 per cent, he said. "We buy it, we improve it, we ultimately sell it."

-The Dominion Post and BusinessDesk

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