Dairy plant good; diversification better

The distant sound of Winston Peters bemoaning . . .

This is big. A $200 million dairy factory development offering 60 Southland jobs, estimated to inject $90 million into the region’s economy, and well placed to provide strong access to a massive China market for infant formula in particular.

It’s a deal, achieved during a sharp downturn in the commodity price. It carries plenty of componentry to generate widespread celebration.

Which there will be. Legitimately so.

It will not, however, be uniform.

The sense of celebration will in some places be mitigated, even negated, by unease about the dairy industry rise that is lamented in many quarters, much as it has become a key part of how Southland earns its living. On top of which, that the heaviest investment is from China Animal Husbandry Group, a state-owned Chinese company that is taking up a 72 per cent stake in Mataura Valley Milk.

The distant sound of Winston Peters bemoaning another case of offshore investors taking over our own export industry will not lack for amens from within the region.

And the suppliers would be pulling out of somewhere else; no prizes for guessing where. As Federated Farmers spokesman Allan Baird points out, Fonterra’s Edendale part is not working to full capacity.

To be sure, a more substantial local ownership would have been welcome. But it’s hardly as though the Chinese input was an optional extra for a project that would have gone ahead anyway.

Hard, too, to argue it’s a project we’d be better off without. About the same time the deal was being announced, Southland Regional Development Strategy chairman Tom Campbell [who has welcomed the news] was reminding a meeting of Southland business representatives that the region’s economy, emphatically based on exports, could be likened to a tripod. Dairy and aluminium each provided a leg; everything else combined to make the third leg.

Given that dairy and aluminium prices tended to rise and fall in unison, this accentuated the vulnerability. He believed a fourth leg was needed, incorporating ‘‘new industries of real substance’’.

This is exactly right. What’s more, he’s predicting that the most promising areas of endeavour -aquaculture, tourism and student numbers -- are ones that inherently have a fairly light impact on the environment. Something that few would say about dairy.