Staff across the 13 dairy farms and three drystock properties had been understandably apprehensive about the changeover to Landcorp management and Shanghai-Pengxin ownership, he said. He spent much of early December visiting every staff member, offering them positions under the new structure.
Under the terms of agreement with Shanghai Pengxin a new joint venture company, Pengxin New Zealand Farm Management, will run the properties 50:50 with Landcorp. Staff choosing to stay have the opportunity to apply to work for Landcorp and all have been given information packs on Landcorp and opportunities there. Landcorp will now effectively be the sharemilker in the operation, with Kelly having signed off on a cheque for $24 million over 16,000 head of dairy cattle at the end of November.
Kelly said there was a level of deferred maintenance to be addressed, with receivers’ hands being tied by bank constraints before the sale’s completion.
“There were also issues like supplements that staff had ordered that had not been delivered that will be sorted.”
He said the central North Island properties faced the threat of getting dry after minimal rain through November, with the higher-altitude Taharua farm better off than most. Average grass cover at purchase was only about 1700kg dry matter (DM)/ha and rain was needed quickly, with minimal surplus harvested at that point.
“We may have to shift some cows around between other Landcorp properties,” Kelly said.
One key advantage Landcorp noticed in striking a deal with Shanghai-Pengxin was the ability to dovetail the operation with its Wairakei Pastoral operation in the same region.
“Of course it will be a different cost centre but they will effectively be part of our portfolio.”
He considered cow condition to be average at early summer but felt receiver KordaMentha had done a good job in upgrading the herd over the past three years.
Meantime, Landcorp is taking advantage of record low carbon costs by felling another 1000ha of forest land this year for conversion, and a further 4000ha is earmarked for the coming three years.
Shanghai Pengxin is obliged under conditions of approval for purchase granted by the Overseas Investment Office to invest a further $15.7m in the next three years to upgrade the farms and increase milk production. While milk from the properties will initially be sold to Fonterra, the company has made no secret about its desire to consider processing under its own label, possibly through a toll processing arrangement with another company.
Landcorp is also looking at opportunities that could come through the liaison, possibly working with Shanghai Pengxin to improve that company’s sheep genetics on large-scale mutton operations in China. Company spokesman Cedric Allan said the demand for safe dairy products in the Chinese market was growing, with New Zealand being synonymous with food safety and supply.
In late November real estate development company Top Harbour, 45%-owned by Pengxin chair Jiang Zhaobai, settled on a deal for 31ha of land at Gulf Harbour, north of Auckland, where he plans to build 1000 houses in a marina environment over the next decade.
It’s understood negotiations are also continuing in the background between Shanghai Pengxin and iwi to possibly enable Maori to buy the two Benneydale properties, which have been at the centre of a tribal claim.