30 Jan 2012

Crafar investment expected to boost high value dairy exports

6:49 am on 30 January 2012

A Chinese company's investment in the Crafar farms is expected to eventually boost exports of New Zealand's high value dairy products.

Government ministers last week approved a bid by Shanghai Pengxin to buy the North Island farms, which are in receivership.

The approval follows a recommendation from the Overseas Investment Office.

Shanghai Pengxin spokesperson Cedric Allan won't disclose the purchase price, but says the company will invest more than $200 million buying and upgrading the farms over the next few years.

He says the company sees the opportunity to sell high value processed product in China and not to keep on exporting milk powder.

Mr Allan says the key to that is to get some control over the milk and then go into a joint venture with a local processor to produce what's hoped will be a large volume of packaged products for China.

Massey University professor of pastoral agriculture Jacqueline Rowarth says New Zealand is already exporting high value dairy products to China, but Shanghai Pengxin's investment and know-how should help to develop the market faster.

She says New Zealand products have a very good reputation in China because of the high regulatory food safety standards, but it's mostly baby formula.

Dr Rowarth says now New Zealand has the chance to move more products into China, more quickly.

She says in many places in China there's very little storage space in houses and it's necessary to consider packaging, such as individual servings, which suits their needs.

Dr Rowarth says it should be possible to capitalise by providing high value products in appropriate packaging.

Meanwhile, a rival bidder for the farms, the Crafar Farms Purchase Group, plans to proceed with legal action to try to stop the sale.

Spokesperson Alan McDonald says the group expects to be back in court early this week.