Tuesday, 16 January 2018

Avoiding supply management

Canadians wanting to run a dairy farm have little choice but to deal with Canada's crappy supply management system. 

Well, unless you're the Canadian Government, and you're running a public sector pension scheme, and you want to make investments in dairy, and you know that supply management is crap.

In that case, you have the resource to jump through New Zealand's Overseas Investment Act hurdles and buy dairy farms here, where there's no supply management and you don't have to pay tens of thousands of dollars in quota fees to buy the right to milk a cow.

Here's Radio New Zealand:
The sale of a Canterbury dairy farm for more than $17 million to a company owned by the Canadian government has been approved by the Overseas Investment Office (OIO).

OIO approval was given in November for the purchase in the latest round of decisions for overseas investment of sensitive New Zealand land.

The transaction includes a medium sized dairy farm of 335 hectares and a neighbouring dairy support block of 72ha, also on freehold land at Hororata. They will be combined to create a larger dairy farm.

Applying for OIO consent was Ramsay Dairy Farm Ltd, wholly owned by the Canadian government and linked to a public pension investment scheme.
It isn't the first investment in NZ dairy by the Canadian Government, via Ramsay Dairy Farm Limited. Here's an OIA decision from 2015:

DecisionConsent granted
Section 12(a) Overseas Investment Act 2005
Decision Date12 November 2015
Investment
An overseas investment in sensitive land, being Ramsay Dairy Farm Limited’s acquisition of:
  • a freehold interest in approximately 322.8995 hectares of land at 249 Domain Road, Oxford, Canterbury; and
  • a freehold interest in approximately 34.6068 hectares of land at 282 Domain Road, Oxford, Canterbury.
Consideration$18,613,673
ApplicantRamsay Dairy Farm Limited
Canadian Government (100%)
Vendor
Oxford Pastures Limited
New Zealand (100%)
Farm Partners Limited
New Zealand (100%)
Background
The Applicant is ultimately, indirectly, owned by the Public Sector Pension Investment Board.
The land is currently being used as a dairy farm. The Applicant intends to acquire the land for the purpose of dairy farming and milk production and will engage FarmRight to manage the land for that purpose.
I suppose it saves the Canadian Government from having to buy dairy quota. Would that Canadian farmers could do the same in Canada.

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