The sale of a Canterbury dairy farm for more than $17 million to a pension company owned by the Canadian government has been approved by the Overseas Investment Office (OIO).
OIO approval was given in November for the purchase in the latest round of decisions for overseas investment of sensitive New Zealand land.
The transaction includes a medium sized dairy farm of 335 hectares and a neighbouring dairy support block of 72ha, also on freehold land at Hororata. They will be combined to create a larger dairy farm.
Applying for OIO consent was Ramsay Dairy Farm Ltd, wholly owned by Canada’s Public Sector Pension Investment (PSP) Board.
The land was sold by Harry and Gail Schat, owners of Haglea Farm Ltd, and Jennifer, Neal and Mervyn Todd under Ddot Holdings Ltd. Harry Schat was previously North Canterbury president of Federated Farmers for three years.
Ramsay Dairy Farm Ltd has plans to convert some of the dairy support land to create a larger milking platform, and to increase the herd size by about 400 cows.
In its decision the OIO said the benefits to New Zealand included the creation of additional jobs on the amalgamated dairy farm, an increase in milk volumes being processed in New Zealand, increased export receipts and the introduction of capital investment to convert dairy support land to dairying.
Taken into consideration was the applicant’s previous investments that have been “of benefit to New Zealand”, by creating jobs and bringing in additional investment for land development.
The OIO gave approval for the PSP’s Ramsay Dairy Farm Ltd to buy two dairy farms near Oxford, North Canterbury in 2015. In order to meet OIO criteria, the new owners pledged to increase the size of the milking operation on the farm, mostly by investing in irrigation infrastructure and increasing its herd size.
The investment board is one of Canada’s biggest fund managers handling the investments of public servants, the Mounties and the military. Last September PSP had CAN$139.2 billion of assets under its management.
Canadian investors were shown in a KPMG report to be the biggest foreign investors in New Zealand in 2014 with 22 per cent of total investment. In that year the OIO approved PSP buying 18 commercial properties for about $1b and it increased its holding in Kaingaroa Timberlands.
Canadian pension schemes are not alone in investing in New Zealand dairy farms. In 2016 the NZ Super Fund spent $60m in a buy-up of seven dairy farms in central Southland. The farms total 1200 hectares and are run by farm management company FarmRight.
The NZ Super Fund made its first offshore farm investment last October taking a stake for an undisclosed sum in the Australian beef stud Palgrove. The investment received approval from the Australian Foreign Investment Review Board and brought the fund’s rural land portfolio then to 33 farms worth about $340m.
The fund, a New Zealand Government savings vehicle to help pre-fund the future cost of superannuation, reported it continued to see rural land as an attractive long-term investment and a “good diversifier” for its portfolio.
Source: NZFarmer.co.nz