by Lynda Kiernan

New Zealand’s Overseas Investment Office (OIO) has approved proposals submitted by Craigmore Sustainables for agricultural development projects, as part of the firm’s Permanent Crop Limited Partnership, which was established in 2016 as a vehicle through which overseas investors could gain exposure to New Zealand wine, apples, and kiwifruit. 

The first approval was for a NZ$38 million (US$25 million) scheme that will have a significant effect on kiwifruit production in the Kerikeri region. Craigmore has acquired 137 hectares (339 acres) of diary farmland that it intents to convert to kiwifruit orchards – a project that would increase local kiwi production by more than a third, and would create nearly 30 jobs.

The second approval was for NZ$52 million (US$35 million) proposals by Craigmore to develop apply orchards in Hawke’s Bay and Gisborne, that will create 100 full-time jobs, and will drive an additional NZ$30 million (US$20 million) in exports.

Che Charteris, CEO of Craigmore Sustainables, said that the firm was building out horticultural businesses, mostly via the conversion of pastoral land to permanent crop operations, worth more than NZ$200 million (US$133 million). However, also noted that access to capital for such endeavors was a challenge.

“Our focus is to build the best New Zealand orchards producing top-selling fruits, including kiwifruit, apples, wine grapes, plus emerging crops such as cherries and avocados,” said Charteris. 

“One of our core sustainability values is right land, right use. New Zealand has vast areas of land that are well suited to grazing livestock, but there are also some areas that should be converted to horticulture and forestry,” he added.

Michael DeSa, AGD Consulting, also addresses New Zealand’s need to turn to land conversion in order to achieve scalability in his article The Value Down Under: Investing In New Zealand and Australian Ag published by GAI News in September 2018, stating, “The prospects for investing in scalability in New Zealand are limited as expansion of area devoted to key commodities is fixed. Therefore, opportunities for increasing scale in New Zealand will likely come in the form of land conversion…”  

“Increased scale in one crop type will likely come at the expense of another, as land is converted to more profitable products. Particularly in New Zealand, limited arable land constraints could lead to a lack of scale outside key export products, particularly in the permanent crop sectors.”

The ripple effect begun by Craigmore through its scaling up of permanent crop operations is also welcome by other local adjacent industries, such as growers, packers, and exporters who see these projects as a means by which to grow their own businesses, and a way to raise industry confidence.

“Craigmore is a substantial, professional player. They’ll bring a lot of skill and expertise, along with revenue and employment,” said Rick Curtis, president of the Kerikeri Fruitgrowers’ Association. 

The fund still holds NZ$50 million (US$33 million) in capital, and is seeking out minority investment opportunities in existing horticultural businesses looking to grow.

 

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.