State-owned Landcorp and China's Shanghai Pengxin Group - the company that bought the distressed Crafar farms in 2012 - are about to part company.
Landcorp said it would not renew its sharemilking contract with China's Shanghai Pengxin Group when it concludes at the end of May 2017.
Chief executive Steve Carden said that as part of its new strategy, Landcorp would focus on other areas of growth - principally its value-add strategy under its Pāmu brand.
"Landcorp has worked hard with Shanghai Pengxin and is proud of what the partnership has achieved, turning around 16 poorly performing farms," he said in a statement.
Carden said "our job here is now done" and that Landcorp was happy to move on to other opportunities.
Landcorp would continue the operation of the farms over the next 18 months and is committed to ensuring a smooth transition of the properties including stock and staff at the end of May 2017, he said.
The agreement between Pengxin NZ Farm Group and Landcorp involved a 50/50 joint venture, with Landcorp acting as sharemilker, and charged with developing and managing the farms.
Andy Macleod, chief executive of Pengxin NZ Farm Group, said the joint venture board had approved more than $20 million of capital expenditure over the last three years, including establishment of the Dairy Training Academy, two new dairy sheds, the building of six new houses and renovation of a further 60, six new effluent ponds, 300km of stock and riparian fencing, 800 ha of regrassing and 900 additional water troughs.
Greg Gent, chair of Pengxin New Zealand Farm Management Ltd, which governs the partnership, said the joint venture had worked well.
"Amidst some scepticism at the outset, both Shanghai Pengxin and Landcorp have worked hard to make this partnership a success," he said in a statement.
Controversy over the sale of the Crafar Farms divided opinion in New Zealand and brought foreign land ownership to the forefront of national debate. The first bid for the properties by Hong Kong company Natural Dairy and its sister firm, New Zealand-based UBNZ Asset Holdings, had its Overseas Investment Office application declined in 2010.
Shanghai Pengxin, the next firm to place a bid, successfully fought off a counter-bid from a group led by Sir Michael Fay, which included some iwi farming interests.
Shanghai Pengxin is a privately owned with a diversified business scope covering real estate development, urban infrastructure construction, high-tech investment and investment in industry and commerce around the world.