Foreign investments in New Zealand’s agricultural sector and their regulation, 2001–2017

ABSTRACT

This article focuses on the case of New Zealand within the recent ‘global land rush’. It analyzes data regarding foreign investments in agriculture between 2001 and 2017, traces the development of associated regulations and provides an in-depth account of the workings of the competent bureaucracy, the Overseas Investment Office. It shows how deliberately permissive regulation of foreign investments into land turned New Zealand’s agricultural sector into a popular destination for capital from the Global North in the years following the global financial crisis, especially with the entry of institutional investors. However, the findings also reveal that the general extent and importance of foreign agricultural investments was moderate during the period, most likely because of limited opportunities for investors to find sufficiently large outlets for their funds. Lastly, the attempts to acquire large tracts of farmland frequently sparked popular concern and caused changes in the regulation.

KEYWORDS:

• Land rush
• regulation
• agriculture
• policy analysis
• New Zealand

Acknowledgements

I would like to thank all interviewees for contributing their time and expertise as well as Stefan Ouma, Manuel B. Aalbers, Yunpeng Zhang, Anne-Sophie Iotti, Tomasz Świetlik and the three anonymous reviewers for their comments on earlier drafts. All errors and omissions remain, of course, mine.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Individual summaries can be obtained from OIO’s website: https://www.linz.govt.nz/overseas-investment/decision-summaries-statistics. These usually contain the date, details of the investment, price, percentual ownership in national references, selected background information about the investment and references to relevant legislation. While it is true that these applications that are granted consent are not equivalent to final contracts transferring ownership, the transaction costs of obtaining OIO consent are considerable so it is reasonable to assume that all transactions proceeded once they were given permission to do so. Individual summaries were assembled into one dataset of more than 1100 cases of acquisitions involving rural land (including forestry) or agricultural production more widely, of which 625 are agricultural land. The original dataset can be obtained from the author upon request.

2 Such acquisitions are generally called ‘investments’. To be precise, some of these investments could be more adequately considered capital placements. Political economy provides a useful distinction between investments, conducted to produce capital and consumption commodities in greater volume, and placements, money paid for profiting from income streams of any (unproductive) type (Robinson, 1969).

3 These six aspects are exhaustive given the content of the publicized data.

4 All breakdowns are based on gross hectares. Because not all summaries contain all the information, the number of cases varies depending on the breakdown.

5 Providing clear ownership data is one of the OIO’s key responsibilities which it carries out diligently (as one of the few available graphical ownership structures attests; Overseas Investment Office, 2014, p. 71). In the case of institutional investors, the data suggest that most national references are in line with the origins of the funds they manage (e.g., Canadian or Swedish pension funds).

6 This classification needs to be treated with caution as I could not rely on any existing classification but combined information about the buyer in the decision summaries with additional input from New Zealand’s company register (https://companies-register.companiesoffice.govt.nz/), company websites and media outlets.

7 A more detailed account lies beyond the scope of this summary given the introduction more than twenty acts, regulations and amendments involving land governance in the post-war years alone. In New Zealand’s political system, acts are the final forms of laws once they were accepted as bills. Existing acts can be amended through additional acts. Regulations are legislative instructions designed to deal with details of acts that are likely to change based on interpretation, thus offering a way to alter the effects of legislation without changing the legislation itself.

8 This list included, for example, effects of creating or retaining jobs, introducing new technology, increasing export opportunities, ‘competition’ or ‘efficiency’.

9 The continuous increases of the screening thresholds, from NZ$500,000 in 1987 to NZ$50 million in 1998, support this claim.

10 At time of writing, the quality assessment is mandated for applications that directly concern purchases of ‘sensitive’ agricultural land above five hectares, of properties that are adjacent to such land, or that involve ‘significant business assets’ in excess of NZ$100 million.

Additional information

Funding

This work was supported by the Fonds Wetenschappelijk Onderzoek under grant number G079718N.

Notes on contributors

Tobias J. Klinge

Tobias J. Klinge is a PhD candidate at the Division of Geography & Tourism at KU Leuven (Belgium) where he investigates corporate financialization dynamics. His previous research interest included the financialization of land and its regulation. He holds a MA degree in economic geography from Goethe-University Frankfurt/Main, Germany, and a BSc degree in geography from Georg-August-University Göttingen, Germany.