The debate stirred by the potential sale of the 16 Crafar Farms to Hong Kong Chinese interests needs to be put in context. Hong Kong-listed Natural Dairy (NZ) Holdings will gain operations milking about 20,000 cows if the Overseas Investment Office approves the transaction. It’s roughly the same number of cows Singapore-based Olam International will snare if its takeover offer of NZ Farming Systems Uruguay is successful. Olam’s interests also include Open Country Cheese, another processor Fonterra is compelled to sell milk to.

While the NZ Farming Systems assets are in South America, the implications are potentially greater for NZ Inc because Farming Systems’ modus operandi is effectively exporting NZ’s rural technology. The other deal to easily get across the line this week is the transfer of control of Synlait to Chinese Govt-backed Bright Dairy & Food after a failed IPO. Synlait’s farmers supply some 300m litres of milk to the company, which is planning to double capacity.

- - -NOT A SUBSCRIBER? - - - - - - - - - - - - - - - - - - - - - - - - - - -

THE MAIN REPORT’S PROFITABLE AGRI-BUSINESS

For anyone involved in farming or agri-business. Covers the full range of livestock farming, farm management techniques, animal health, forestry, farm finance, agricultural market trends, production, processing and pricing, cropping, pasture management, and staff issues. Full of trends, forecasts and analysis, with comment from our Wellington bureau every week o the latest political issues facing farming. Published each Monday 46 times a year.

To subscribe http://www.nzagri-business.co.nz/home/special-introductory-offer

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The two transactions highlight the woeful lack of venture capital or even mum-and-dad equity in the NZ market. For years property investors have relied on funds borrowed overseas to pay for their houses. With a moribund stock market, overseas may be the easiest place to tap capital for investment and growth. Olam, a broad-based food and ingredients manufacturer and distributor, will have the deep pockets Farming Systems needs to complete its developments in Uruguay, given the premium price it has offered for its takeover.

 Copyright © The Main Report Group - NZ AGri-Business