Chinese Buy Up Of Dairy Farms

Get Used To It.
This Is What A “Free” Trade Agreement Looks Like

- by Murray Horton

The most unbelievably naïve reaction to the March 2010 news that a mysterious Chinese company is hoping to buy up to $1.5 billion worth of dairy farms came from Federated Farmers, which said that this is an “unintended consequence” of the NZ/China Free Trade Agreement (FTA). Pull the other one. There’s nothing unintended about this consequence, this is how “free” trade agreements are supposed to work. They all come with embedded investment agreements which protect the rights of investors from the countries which are party to the Agreement, and those foreign investors’ rights are backed up by the force of legal sanction. For example, the NZ/China FTA includes a provision that NZ cannot make or amend laws (without China’s permission) that “discriminate” against Chinese investors. So this is the outcome of what our brilliant politicians (both Labour and National) have signed us up to.

And this is only chickenfeed compared to what will happen if we keep up this mad headlong rush into an FTA with the US via the new Trans-Pacific Partnership, for which negotiations have started. Dairying is the white gold of NZ agriculture at present, and it would be thrown wide open to the predations of the massive agribusiness transnational corporations that dominate US agriculture. And it gets worse – the politically very well connected US dairy lobby has already made it very clear that it will fight, tooth and nail, Fonterra’s access to the US market. To quote Bernard Hickey (NZ Herald, 23/3/10, “Why bother with a US FTA?”, “Get the picture? These guys really want to use the Trans-Pacific Partnership to shut out Fonterra from America…These FTAs are never about free trade from an American point of view. They are about creating another opportunity to strong-arm smaller countries into granting trade concessions to large American businesses”. CAFCA could not have said that better ourselves.

So, cow cockies, be very careful what you wish for, as you join the lemmings of politics and their media cheerleaders charging towards the cliff of a US FTA (the “holy grail” to its proponents). You may well end up with the worst of both worlds – locked out of the American market and finding your own dairy farms being bought up from under your feet and you being reduced to the position of Third World peasant farmers, waving goodbye to your product at the farm gate, while others make the money from it. Some holy grail.

As for the Chinese agribusiness buyup of dairy farms, the description of it by its own mouthpieces paints a perfect example of vertical integration, whereby the Chinese owners control every stage of the process from NZ paddock to the sales of the finished product in China. They clip the ticket at every stage of the hermetically sealed process, with minimum benefit to NZ. It’s simply a new, Chinese, version of the British economic colonisation that dominated this country’s agriculture up until the 1970s. So, instead of being a “farm for Britain”, NZ will be a milk cow for China. Apologists for foreign land ownership always say “they can’t take the land away”. Why would they want to? It is much more profitable for them to leave it right here, and milk it (pun intended) for all it’s worth.

Dairying “Gold Mine” Ripe For Mortgagee Sale Takeover

The media has already highlighted a number of aspects of this proposed massive buyup that look distinctly Mickey Mouse. The Chinese company was actually a mining company which has changed its name to Natural Dairy (NZ) Holdings Ltd. That sounds much more nice and “green”, doesn’t it? The company is registered in the Cayman Islands tax haven; it lists a street address in Hong Kong but has no phone number; and one of those involved in the deal has been the subject of intense media scrutiny (e.g. NZ Herald, 25/3/10, “Should May Wang be allowed to buy NZ’s dairy farms?”, Bernard Hickey, The fact that the only confirmed part of the deal is that Natural Dairy is buying Alan Crafar’s fallen empire of dairy farms shows the dangers of monoculture in farming, of putting all one’s eggs into one basket, of the gold rush mentality (it used to be forestry, kiwifruit, goats, ostriches, Chathams Islands crayfish) and of a complete lack of any overall planning when it comes to the most vital productive sector of our farming industry. Crafar is the perfect illustration of an era just past when every man and his dog got into dairying – in his case, the bloody dog might have done a better job.

Add this to the rapidly growing list of sins caused by this headlong rush into dairying, such as the attendant massive pollution of land and waterways, and the naked grab for exclusive water rights in parts of the country not naturally suited to a water-intensive industry. This water grab by dairying has claimed its first political casualty, namely regional democracy in Canterbury (the province with the most rapid and extensive land conversion to the most intensive dairying in the country), with the Government sacking the regional council, Environment Canterbury (ECan) as of May 2010, replacing it with appointed Commissioners and deferring the 2010 ECan election until at least 2013.

The Chinese buy up is definitely not “foreign investment” – it’s a mortgagee sale. And don’t expect our “oversight” authorities to do anything about it. Natural Dairy has already bought four farms and “neglected” to get approval from the Overseas Investment Office (OIO). No worries to our heroic rubberstampers – it “rebuked” them (what exactly does that mean?).When Natural Dairy did apply to the OIO in April for permission to make a single $1.5 billion investment in land and plant, the OIO returned the application, telling Natural Dairy to reapply as several transactions are involved, not just one. This doesn’t mean the application has been declined, simply that the initial paperwork was not done correctly.

Expect more of this stuff as the realities of an “open economy committed to foreign investment and free trade” become more glaringly obvious by the day. Never mind Gerry Brownlee throwing open the conservation estate to foreign mining transnationals, that is bad enough but its worst effects remain several years in the future. However, the Chinese are already here to mine milk. And the Americans won’t be far behind if the Government (either National or Labour) persists in this childlike fixation with “free” trade.

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Foreign Control Watchdog, P O Box 2258, Christchurch, New Zealand/Aotearoa. May 2010.


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