'Erosion of control': New Zealand First's warning over multi-million-dollar Westland Milk deal

New Zealand First has issued a warning about "erosion of New Zealand control" after a Chinese state-owned dairy company offered to purchase New Zealand's Westland Milk Products. 

Yili Industrial Group has offered $588 million to purchase the 125-year-old independent co-operative dairy company, owned by over 429 farmer shareholders, that supply milk for processing. 

NZ First Primary Industries spokesperson Mark Patterson said on Wednesday the Westland Milk board needed to "consider carefully the consequences of voting in favour of the sale". 

"By selling their co-op for short-term gain they need to be particularly concerned for the more isolated farmers who risk being dropped when the 10-year guaranteed supply period ends."

He also warned about the "continued erosion of New Zealand control of the dairy industry", adding that there could be "long-term consequences of becoming price-takers at the end of a supply chain controlled by a foreign multinational". 

Westland Milk has been under the spotlight after the Hokitika-based company secured a $9.9 million loan for a milk segregation project from the Provincial Growth Fund (PGF), led by NZ First MP and Regional Economic Minister Shane Jones. 

In its latest annual report, Westland Milk reported a massive $254 million debt - hence the Government's decision to step in. 

The interest-bearing, repayable loan was announced with much fanfare during a trip Jones made to the West Coast with Prime Minister Jacinda Ardern in November. 

Jacinda Ardern and Shane Jones.
Jacinda Ardern and Shane Jones. Photo credit: Newshub

Jones soon faced backlash over the loan, after it was revealed banks deemed it too risky. He defended the move, saying foreign-owned banks operating in New Zealand let the regions down, lacking the Government's "wellness approach". 

But it was revealed in February that the Government had ignored official advice from Treasury not to give Westland Milk the loan, over concerns about the Government giving loans to private companies than banks had turned down. 

Despite the advice, Jones and Finance Minister Grant Robertson pushed ahead and signed off on the $9.9 million loan, sparking backlash from the National Party. 

"Shane Jones is a loose unit, we've all known that. He has gone about this fund in a nakedly political way," National's Regional Economic Development spokesperson Paul Goldsmith said in February. 

In his statement on Wednesday, Patterson said the Government had "not been a passive bystander" to Westland Milk's debt worries, having "recently offered a loan from the [PGF] in order to accelerate [its] value-add strategy". 

"As a country we need to get serious about the repercussions of losing control of processing companies for our agricultural exports," he said. 

Similar concerns have been raised over China-owned Cloud Ocean Water seeking permission to build another bottling plant in New Zealand, sparking thousands to protest in Christchurch earlier this month over New Zealand losing control of its resources.