Foreign investment fears unfounded: report

The hype over foreign investment in New Zealand is unwarranted, says KPMG.

Fears foreign interests have been mounting a major land grab in New Zealand, have been shot down by global accountancy firm KPMG in its latest report into the agricultural sector.

Applications before the Overseas Investment Office offered no evidence to suggest New Zealand was a target for significant inbound investment from overseas governments.

Nor was there justification for significant changes to overseas investment rules, KPMG Agribusiness's report Evolving Agenda: Foreign Investors - friends or foes? says.

The high price of quality rural land and our position in relation to the rest of the world meant we were unlikely to be at the top of the list of preferred destinations for most foreign land investors, KPMG's head of agribusiness Ian Proudfoot said.

The paper says media focus on the ownership of New Zealand's productive agricultural assets had been intense, stoked by the very public tender process for the sale of the Crafar Farms, rumoured bids from sovereign investors in the Middle East and sales of processing assets to international companies.

"New Zealand has some significant agricultural advantages which prima facie would make our land attractive to international investors; in particularly the fact that we have substantial fresh water resources by global standards and that product produced in New Zealand has a clean, green, sustainable brand attached as a result of its origin."

However this was balanced by the cost of pastoral land in New Zealand, which was expensive by developed world standards, our isolation, and high production costs.

KPMG also says it does not see value in a significant tightening of overseas investment rules in New Zealand.

As a small, developed economy New Zealand has always required inbound investment to support our standard of living, the report says.

The agricultural sector in particular lacked equity to take advantage of the opportunities available to it.

"Foreign investment offers the potential for us to maximise the value of our land," the report says.

"This does not mean that our overseas investment criteria are perfect, they have in the past been amended for political expediency," Proudfoot said.

The report also found New Zealand agribusiness companies have the opportunity to benefit from adopting global sourcing strategies.

"It is our belief that a key part of the transformation that needs to occur in New Zealand's agricultural sector is encouraging agribusiness companies to follow Fonterra and Zespri's lead in developing global product sourcing strategies."

"This strategy relies on us being able to gain land access around the world and we do not want to adopt policy settings which would restrict this access in an adverse way."

KPMG, however, recognised the high price of land here was a deterrent to getting young people onto the land and investing in farms.

"Part of the solution relates to the development of schemes that link young farmers with potential equity investors, be they domestic or international, to create equity partnerships that provide an entry point to the farm ownership ladder," KPMG says.

- NZ HERALD ONLINE