While they may be in different hemispheres and on opposite sides of the world, there are a lot of similarities between New Zealand and Canada. The New Zealand economy is driven by their land and natural resources. So is Canada’s. Our agriculture is heavily dependent on exports. So is theirs. The Kiwis export nearly 90 percent their dairy, meat, fruit and vegetable production, mainly to Australia and Asia where their brand, like Canada’s, is highly desired and looked upon as “clean, green and safe.”
We have similar social problems, too, including housing prices and shortages, inflation, urbanization, environmental concerns and the “little brother” syndrome that comes with living so close to much larger countries, us to the United States and them to Australia and China.
Also key, though, is that both New Zealand and Canada have been eyed by Asian corporations wanting to expand their land and food processing capabilities
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Farmer vs. corporation – a battle for land
Meet Ed Pinckney, a farmer and 2020 Nuffield scholar from New Zealand who unexpectedly found himself going up against a large Chinese company for the purchase of Jericho Station, a 1,359 ha (3,358 acre) farm in the Northern Southland region of the South Island, near Te Anau.
Our story begins in 2017 when Pinckney learned that Jericho Station was up for tender by Landcorp — the New Zealand state-owned farming enterprise. Knowing that Jericho was a highly desirable location, and wanting to expand his beef and sheep operation, Pinckney submitted a tender. It wasn’t his first venture. He’d made several property purchases over the years, and he expected this acquisition to be equally simple.
He placed an offer of C$7.5 million, conditional on bank financing since another of his farms needed to be sold to ensure enough equity was raised for the purchase.
What Pinckney didn’t know until later, though, was that a second tender was being placed by a Chinese company for C$7.6 million. And it was accepted.
For the first time ever, a New Zealand government office was selling New Zealand land to a foreign entity.
In New Zealand, foreign land purchases are subject to approval by the Overseas Investment Office (OIO), which regulates the sales and control of sensitive assets, including rural, commercial, forestry and residential properties, plus business assets and fishing quota.
To obtain OIO consent, bidders must show a “substantial and identifiable benefit” to New Zealand and pass an investor test which considers their business experience, financial position and overall character.
In 2017, according to Pinckney, “OIO didn’t have a history of declining anything and there wasn’t much scrutiny. For whatever reasons, the Chinese company was also given favourable terms, none of which were commonly seen in an open competitive farm sales process.”
A few weeks after the tender closed, Pinckney made his offer unconditional and it was accepted by Landcorp as a “back up” offer. Additionally, Pinckney submitted a land management proposal in which he detailed his land and resource management plans. He also committed to continuing to allow trekkers on existing trails, and he spelled out why it was important to have the land owned by a local farmer. The other bid had no such detail.
Then something else unexpected happened.
At the same time as the bidding was in process, the 2017 national election was looming, and suddenly Pinckney found himself in the political spotlight.
“I didn’t intend to get political, but it became a big thing as at the time there was a lot of foreign investment in New Zealand. And it was getting a bit out of control as much of the money coming in was to purchase property for aesthetic purposes,” Pinckney says. “A great deal of good farmland was being taken out of production.”
A post on social media from a friend of Pinckney’s unintentionally went viral and got the attention of the leader of the National Party. Knowing foreign ownership was already an issue, the politician made the issue central to his campaign. Pinckney became a reluctant media star. While he didn’t personally set out to be a public figure, however, he figured all of the publicity would be to his benefit.
With the media focus, public support grew. New Zealanders heard Pinckney argue that no overseas buyer could deliver the benefits he could provide. He was a New Zealand farmer, coming from a farming family with a proven track record.
The Chinese offer was suddenly withdrawn. Pinckney took possession of Jericho in June 2018.
The publicity never felt comfortable to Pinckney, but it seems it ultimately did help — both in the purchase, and in changing the laws. And thankfully the media attention died down soon after the sale was finalized.
His victory became a symbol of sorts, helping achieve both a change in government and the tightening of foreign ownership laws. Now the OIO denies the purchase of non-urban land over 5 ha other than land already used for forestry. The law includes anyone without New Zealand citizenship or a resident visa and any company incorporated outside of New Zealand or where foreigners hold 25 percent or more of the ownership, voting or governance rights.
Canadian parallels
“We still need foreign investors. We’re reliant on them,” Pinckney says. But his experience makes him think foreign money must have limits. “Investors have put a huge amount of money into the dairy industry. They can create a lot of value in the right context, but I don’t agree with them making mass land purchases. They shouldn’t make family farm operations disadvantaged.”
Many meat and dairy processing companies in New Zealand are foreign owned, mainly by the Chinese. It has opened up new supply chains, but there is concern that the Chinese want to to control the whole system.
Silver Fern Farms (SFF) is one example where foreign investment has worked. Employing 7,000 people working in 14 operational plants across New Zealand, SFF processes 30 per cent of New Zealand’s lamb, beef and venison. The company is an equal partnership between the SFF Co-operative and Shanghai Maling Aquarius — a leading Chinese meat processor and distributor.
Five years after the Chinese invested $267 million for half of SFF, the meat company has recorded back-to-back record profits. The investment allowed the company to pay off debt, as well as launch a successful pasture-to-plate strategy. The business arrangement has also seen significant spending on processing capability, creating opportunities to develop new products for different customer bases.
China holds huge market potential for New Zealand. It accounted for 32 percent of New Zealand’s total exports, and the numbers in agriculture are even bigger: China takes 44 percent of New Zealand’s dairy and 41 percent of red meat. Kiwi fruit exports also rose 43 percent in one year.
While Pinckney sees China as still an expanding market, he is concerned that New Zealand is too reliant on one country. “When China doesn’t like something, they have the ability to completely handcuff us, effectively turning off the tap,” he says.
It appears he’s right. In 2016, New Zealand investigated China for dumping cheap steel into the country and China immediately threatened to slow the flow of dairy, wool and kiwi fruit imports.
China – Canada trade
Canada is similarly exposed to Chinese pressure. In 2019, following comments by Ottawa about human rights in China, China placed many restrictions on imports of Canadian agricultural products, although the numbers rebounded in 2020. Still, tensions exist which have an impact on Canadian farmers.
According to the Canadian Canola Council, more than two years of bans and restrictions on canola exports to China have cost Canada’s industry roughly $2 billion through lost sales and lower prices. Along with banning shipments of canola from Viterra and Richardson, Beijing continues to institute numerous new regulations, along with a more aggressive regime of inspections, slowing trade with other Canadian shippers.
Although it has since been resolved, in 2019 China also restricted nearly two-thirds of Canadian pork processing capacity.
The Organisation for Economic Co-operation and Development (OECD) forecasts that by 2028, China will be the largest consumer for some of Canada’s key agricultural goods such as oilseeds, soybeans, protein meals and cereals.
Pinckey might ask if we should be wary of getting too close. Or, as he would say, are Canada and China reliant on each other, whether we want to be or not. China needs assurance of food security, supply reliability and high-quality products for its massive population. Canada seeks a stable trading partner. Where lies the happy balance?
Jericho Station now
Pinckney is a top farmer with over a decade of experience buying and improving land, something he’s carried on with the Jericho purchase.
In 2008 he started leasing the family sheep and beef property. Over the next five years, he purchased two neighbouring places, bought the home farm and doubled the carrying capacity of the land. In 2013, he sold two-thirds of the operation and purchased a rundown dairy farm which is run by a share-farmer.
In 2018, when the Jericho purchase was completed, he sold what land he had left, kept the dairy and bought the larger property. He hasn’t regretted anything.
The station currently runs 8,000 sheep and 1,000 predominantly Angus cattle. Pinckney trades about half of his bulls for beef with the rest kept as breeding stock. In the winter, the dairy cattle from the other farm are also grazed as they are only milked seasonally — from September to June. Feed includes winter pasture and winter brassicas such as kale and swedes.
The farm has also diversified into Manuka honey for growing health markets, and he is in the process of getting permission for nine wind turbines.
So where does he go next?
Pinckney says he has a curious mind and is always looking for new opportunities. His goal is to make Jericho as productive as possible within an environmental window. He’s not looking to increase stock, but rather to concentrate on performance and profitability, and he notes that the forecast income from the wind farm is roughly equal to all of his other farming enterprises put together, so it has huge potential.
For him, though, sustainability also has another meaning. “My greatest challenges now are legislative with increased policies and regulations,” he says.
Actually, that might sound rather like Canada too.
