Crafar farms: racism or economic nationalism?
The furore over the Crafar farms leaves me sitting in a position that might be called six of one, half a dozen of the other. It is difficult to argue that the reason why this particular sale has provoked such fury is not because it taps into an element of underlying racism, and a quick scroll through the Herald comments is all that is needed to evidence this. Anything that Winston jumps all over with such fervor is generally a clue that we are in the realm of exclusive notions of economic nationalism.
We are only two generations after World War II, and the argument that the Chinese abuse human rights and are quickly becoming a global power is difficult to maintain once one actually delves into the nitty gritty of foreign affairs. We are, after all, stuck in the middle of an escalating political theatre in the Pacific that has to do with the strategic location of minerals and rapidly declining fisheries stocks, not to mention the diplomatic aid in exchange for UN votes of small island nations. On the other side of this theatre sits the US, whom are equally open to allegations of human rights in their preference of war by proxy, or their geopolitical dominance that saw troops in 97 countries in a movement that is sometimes referred to as Obama's "axis of instability". This struggle for dominance at its current rate looks likely to be primarily played out through economic movements and aid, rather than any kind of warfare, despite the cattle calls and the establishment of a US base in Darwin. Posturing is central to foreign affairs, and countries frequently call their opponent's bluff. Unless the US is foolish enough to invade Iran, the current balance looks likely to be maintained with China. That Europe is attempting to look to China for a bailout signals that relations have not really thawed that much, and China has been increasingly keen in recent years to be seen as a responsible superpower within the international arena. If we want to have some degree of independence from US foreign policy in this environment, playing ball with China to a certain extent is inevitable. The ethics around the human rights argument is even trickier - there is some evidence to suggest that cutting trade ends up hurting the people at the bottom most. Beyond that there is also the obvious - there are a large amount of people in New Zealand that benefit from the inequality in wages and labour levels (not to mention those on iPads, iPhones or Macs whose products are made in factories with suicide nets where the workers are paid around 70 cents an hour, or the fact that most of our electronic devices contain Coltan mined by children in the war-torn Congo). I don't support this kind of exploitation, I am merely pointing out the hypocrisy in the Crafar farms being the flashpoint issue.
In this sense, the right are correct in stating that the issues around the Crafar farms tap into notions of racism. There has been a lot of land that has been sold over the last couple of years, and Labour had sold prime South Island farmland to American songstress Shania Twain. John Key estimates 1% of our land has been sold in total, Federated Farmers say 2%. The fact that we as a people have not gotten as upset over land sales to British and America says a lot. Labour and the Greens' argument that share milkers want to save up to buy their own farms is almost farcical given the prohibitive cost of farm ownership. Let's face it, owning a farm is going to be out of the reach of most people. Considering that only around 0.2% of the population are members of Fonterra (representing 13,000 farmers), and in 2009-2010 they collected 89% of milk production, the odds of upward mobility to farm ownership are not particularly high for farm workers, with the median farm sale price sitting at $3.57 million.
This is not to say that everyone opposing the sale is racist, far from it. Anyone in politics will tell you that their arguments depend on the opinion of voters, and National hitting a raw nerve has left Labour the opportunity to attack. Shearer would be stupid to pass up an opportunity like this on a platter. Land is a flashpoint issue in New Zealand, and forms much of our national identity despite around 85% of us living in towns and cities. Key is out of step with voters here, and this allows Labour, the Greens and Mana the opportunity to further entrench the position that this is a government that does not listen to the opinion of their people. The Crafar farms sale also places stress on National's relationship with the Maori Party, who they need for their majority and who see the sale as operating outside the interests of the iwi they represent.
However, the wider debate that needs to take place is on foreign ownership. The public reaction signals that there needs to be a wider debate around the legislation that the Overseas Investment Office operates on, particularly given the now transnational nature of dairying and agriculture. Transnational dairying and agriculture is becoming a flashpoint for economic imperialism that is of immense concern, and can have devastating effects on subsistence farmers. The perpetrators of this movement extend to the Ivy League universities, who have been investing in African land grabs. To me, there is something ironic in the fact that while we sell off our productive land to foreign entities, Fonterra is engaged in Latin American expansion that is also subject to similar criticism. Fonterra has farms in China, Brazil and they are looking to extend this to India. Take the example of Fonterra's rejected bid for a merger with Nestle in Chile, as this article from the National Business Review illustrates:
The text, which had not yet been submitted for consideration by the Senate, argued that the merger would cause serious harm to domestic, damage competition among companies in the sector and negatively affect dairy farmers.
Chile's Agriculture Minister, Jose Antonio Galilea, earlier this year criticised the proposed merger and said that an "excessive concentration of certain industries" would naturally end up affecting producers. Mr Antonio Galilea noted issues related to unfair competition and transparency.
Chile's National Economic Prosecutor, Felipe Irarrazabal, said the merger "in the opinion of this office" was not positive and mitigation measures were not sufficient to offset the risks involved.
The president of the National Federation of Milk Producers in Chile, Dieter Konow, warned that a company such as Soprole, which controlled more than about 60% of the market, was "free to set the prices for both sales and purchases of dairy products [...] it is not good to a social market economy."
Soprole and Nestlé Chile applied in late November to the Court of Free Competition in Chile (TDLC) for a ruling on the merger, which they claimed would increase milk consumption in Chile by promoting and expanding the product categories the two companies sold.
In much of Latin America, Fonterra has been managing its investments through Dairy Partners America (DPA) joint venture with Nestlé, which operates 13 manufacturing sites in Brazil, Argentina, Venezuela, Colombia and Ecuador These are separate to Soprole, in Chile.
Mr Ferrier said Soprole would now focus on continuing to grow its consumer business in Chile.
"Soprole already has a very strong position in the Chile market and has been posting strong growth in recent years. The team is now focused on building on that strong foundation."
Farming is such a huge part of our economy, and we must preserve our resources, which ultimately are our land. While I have little doubt that selling our productive land and investing in developing nations makes economic sense in the short term, it is difficult to predict how the conditions in these countries will change in the longer term. Land is becoming increasingly multinational, and it is time to have a debate around these issues.