Unlocking potential of Maori farmland

By Brierley Penn

Maori Trustee Jamie Tuuta. Photo / Supplied
Maori Trustee Jamie Tuuta. Photo / Supplied

Maori need $3 billion in investment capital to bring more Maori freehold farmland into production.

That's according to a report commissioned by the Ministry of Primary Industries.

Top brains from Government and Maoridom are engaged in working out just how to unlock the economic potential.

With Maori land comprising some 1.466 million hectares, or 5.5 per cent of New Zealand's total land mass, effective use of this land has significant potential to further the prosperity of Maori titleholders.

But with more than 80 per cent of Maori land currently underdeveloped, much of it ignored by disengaged owners, it is high time for measures that can unlock the billions of dollars of potential that has been lying dormant for generations.

"It is important to note that Maori land owners are not homogenous, and for the most part, the majority of Maori are very reluctant to sell land and therefore deem land to be a perpetual or intergenerational asset," says Maori Trustee Jamie Tuuta.

"Given Maori are not farming for capital gain, then we need to be the best farmers.

"Our enterprises need to be running at an optimal level to ensure we are generating free cash flow. Capital gains are irrelevant if one is not likely to sell the asset in the future."

A second challenge relates to the fragmented ownership structures of Maori land, with many owners disengaged in decision-making and the management of land.

The number of titleholders for any one piece of Maori land averages 100, making effective governance structures a vital aspect of success.

A recent discussion paper by the Te Ture Whenua Maori Act Review Panel suggests removing barriers by engaging Maori landowners so they are able to make future decisions concerning the best usage of land, without excessive need for external intervention.

Maori Economic Taskforce member June McCabe says the proposed dispute resolution process is much more transparent. "If you are an offshore investor who doesn't know anything about the culture and how things work, you are going to feel a bit more confident in knowing there is a fully implemented mechanism.

That's what has let us down in some deals in the past."

Tuuta cautions they are taking a very linear view "in terms of if you have effective governance, engaged owners and sufficient resources, you will have utilisation.

"I think it is more dynamic than that. You're always going to need someone facilitating bringing those elements together."

McCabe says the real opportunity for Maori enterprises to attract capital investment from an international market lie in securitisation.

When the land itself cannot be used as security, strength can come from different companies collaborating to provide their respective income streams as security for investors.

"We've got to extend models whereby Maori can bring their holdings into a centralised pool, and then you can issue securities off that," she says.

"But it still very much hinges on the performance of the underlying assets and the efficient running of whatever the land use is."

- NZ Herald

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