Overseas investment in dairy factories does not amount to investment in ‘farm land’ triggering need for Overseas Investment Office approval, the Court of Appeal ruled quashing objections by the Social Credit political party to purchase of Westland Dairy by Chinese interests.
Social Credit holds itself out as protector of small business interests. It campaigns for local control of the New Zealand economy. It challenged the 2019 purchase of Westland Dairy by Inner Mongolia Yili Industrial Group Ltd. Westland Dairy was then in a dire financial position. Its 430 suppliers, mostly on the West Coast, were being paid less for their raw milk than that offered by other processers such as Fonterrra. A mass departure of suppliers from the dairy co-operative was in the offing. Westland desperately needed further investment capital. Further borrowing was not possible. Departure of more suppliers would throw a greater debt burden on suppliers remaining, accelerating supplier departures.
Inner Mongolia rode to the rescue offering $240 million to take control of Westland and a promise that it would for the next ten years match the raw milk price on offer from Fonterra. Inner Mongolia had previously bought out Oceania Dairy in the South Island.
A 94 per cent majority of Westland milk suppliers approved the deal. The $240 million purchase price was distributed to suppliers as shareholders in the Westland co-operative.
Social Credit challenged Overseas Investment Office approval given the purchase. Westland’s processing facilities at Hokitika and Rolleston should have been categorised as ‘farm land,’ requiring a more thorough investigation, it claimed.
‘Farm land’ comprises the site where primary products are harvested or extracted, the Court of Appeal ruled. It does not include off-site processing facilities.
NZ Democratic Party for Social Credit v. Land Information – Court of Appeal (15.11.21)
22.004