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Ah, those Chinese companies who dub themselves inspirational names like Pure Glory Goodness and Generous Blue Vista or whatever, before leveraging some precious asset or other from our feeble grip.
Today's news that the controlling stake of PGG Wrightson has been lifted gently from New Zealand control and taken by the New Hope Group from China is merely another in the list of such subtle manouverings.
What's behind the move?
The headline describes nicely the primary motivation:
Controlling stake all about seeds
"The largest seeds business in the southern hemisphere is probably the jewel in the crown for the Chinese backers of a partial takeover of PGG Wrightson, independant advisor Grant Samuel says."
"Wrightson supplies commodity and propietary forage seeds in New Zealand, Australia and South America and in other markets. "
I can't help but wonder at the wisdom of losing control of your largest forage seed producer. We're reliant on a primary industry that is in turn reliant on seeds. I just can't see the strategic advantage to New Zealand here.
I wonder what critical service or commodity will be bought up next and I wonder what the buyer's inspirational name will be - the 'Thanks For Everything New Zealand' Company?
6 comments:
The business was not owned by New Zealand per se and as such it has not rights to it in any shape or form.
It was owned by the investors holding the share stock.
It was they who sold the company.
Now if it was an SOE you can claim it as a New Zealand company, a privately owned one is never a New Zealand owned company. It may be better describded as a based in New Zealand company.
Maybe the investors sold the shares to invest in a better growing company such as Mainfreight.
Expanding world wide.
Possibly the seed business is not profitable?
Remeber also that business tends to grow in bursts of investments.
New Zealanders just dont have the money required to grow every business to world wide dominance and our sharemarkets is just a shadow of what it could be.
Hence the few people that do invest tend to pick companies like Fletcher Construction and Maonfreight as real "growth" companies.
Gerrit - yours is a far more intelligent assessment than mine and I don't doubt that you are correct.
However, I still remain dismayed that the sale of seeds that are vital for pastural farming in New Zealand has shifted this way. The amount of direct and immediate control investors with primary intersets outside of NZ have as a result of the sale is concerning to me. A good dose of independence and control over basic commodities seems to be a wise thing to have for a small counrty like ours.
Control of the distribution and availability of seeds is a powerful persuader in a negotiation.
Though in my own defence, I did say,
"the controlling stake of PGG Wrightson has been lifted gently from New Zealand control"
which you might concede is not saying that it's a New Zealand owned company.
Robert,
Will the distribution and control of the seed business in New Zealand be compromised with "foreign" ownership versus local?
The New Zealand farming and cropping sector is still a customer, supply and pricing (R+D as well) of seeds will continue.
If a bigger and better paying customer appeared in say China or Outer Mongolia, the previous New Zealand owners would have just as quickly supplied that market, instead of the local one, if it was more profitable to send seeds overseas.
As we notice with the dairy farmers cooperative Fonterra, selling milk derived products to bigger and more profitable markets overseas comes at the cost to local customers.
With cheese now at NZ$15 per kilo, the local market is in decline so more and more milk will be exported as the local market collapses.
I see though a major opportunity for local people to start making their own cheeses and investing into cottages industries such as cheesemaking, etc.
The economy is a constantly turning circle where as one seed supplier leaves the market, another will be set up.
I buy my seeds for the little I do grow, at the local farmers market from a cottage industry supplier.
In future, as she grows her seed business, more and more people will buy her seeds as her distribution channels widen.
It is knowing what business to get into and seeds right now is the one with a bright future.
Gerrit - that's well explained and I believe I understand what you are saying. Was there no 'loyalty clause' overt or covert in PGG Wrightson that would ensure that the forage seeds we need for the health of our agriculturally based economy was not threatened by offers from overseas for greater returns? If not, why not? Are we so vulnerable to the wealthy foreign lands that our seed supply could dry up in one fell swoop?
I'm amazed (to say the least!).
I hope you can tell me that farmers have somehow insured themselves against this possibility.
I certainly agree with your final sentence.
Private business has no loyalty, other than to their shareholders (and even then they will shite on the small investor over the institutions very quickly) and to expect the shareholders to forego profit returns is highly unlikely. Witness Fonterra.
The only industry that has those "loyalty" clauses is the worlds military industries, where private enterprise is bound to not supply their weaponery to potential enemies (why the NZRAF Skyhawks are still here - USA wont let New Zealand sell them to whoever would like them- Iran for example)without country of manufacture government approval.
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