18 Oct 2012

Shanghai Pengxin ready to start farming

2:01 pm on 18 October 2012

The Chinese company buying the Crafar farms is ready to put on the gumboots and hit the land after the Supreme Court refused to allow a further appeal by Maori farming interests to block the sale.

The court decision removes the last obstacle for Shanghai Pengxin to take over the 16 North Island farms which have been in receivership for three years.

A spokesman for the company, Cedric Allan, says a subsidiary will be formed called Milk New Zealand Farm Management Limited, in a 50/50 joint venture with state-owned farming enterprise Landcorp.

Mr Allan says now it's time to get to work and they're looking forward to becoming farmers.

He says the Overseas Investment Office conditions require the company to spend nearly $16 million on the farms over the next three years.

Mr Allan says almost all the money will be spent in the local areas on things as varied as fixing fences and houses, possibly cutting land into smaller paddocks to assist management or pasture improvement.

He says the company is also required to set up a dairy training school, which will benefit New Zealand.

Mr Allan says there is still the possibility of Shanghai Pengxin doing a deal with local iwi if both parties agree.

Shanghai Pengxin plans to set up a processing operation to market high value dairy products to China, but the farms will continue to supply Fonterra in the meantime.

Landcorp to manage farms

Landcorp Farming expects to take over management of the 16 farms around the beginning of December.

Chief executive Chris Kelly says there will be a waiting period of 30 working days before final settlement between the buyers and the receivers.

During this time, Landcorp and Shanghai Pengxin will undertake due diligence on the farms and check things like cow numbers, cow quality and feed on hand. Landcorp will purchase the cows.

Existing sharemilking arrangements will remain in place until the end of this dairy year, on 31 May 2013.

After that, Landcorp will take over those farms, and if the sharemilkers want to stay on they will become employees of the company.

Drawn-out battle

The farms' receivers say the Supreme Court decisions ends what they call a drawn-out and frustrating battle.

KordaMentha receiver Brendon Gibson says the process has been difficult, with parties entering late in the fray.

He hopes to have everything finalised by the first week of December and, at this point, doesn't envision any more roadblocks