Primary Products
Primary products is a factor under section 17(2)(a)(vi) of the Act. This criterion would likely support an overseas investment where it proposed to use primary products in the production of other goods in New Zealand. For example: where the investor proposed to build a manufacturing plant to process logs into pulp and paper.
Primary products are raw materials that are “extracted” from the land or ocean. They include products of mining, agriculture, forestry and fisheries. These goods are either sold as is or used as raw materials for use in processing or manufacturing.
Primary products include:
- logs
- fruit
- vegetables
- nuts
- flowers
- seafood
- metals, and
- precious stones.
"Processing" refers to the use of a primary product to make another product. Processing must occur in New Zealand - this includes on board fishing vessels in the New Zealand Exclusive Economic Zone prior to export.
Report
The OIO requires a report detailing the extent to which the overseas investment will, or is likely to, result in increased processing in New Zealand of New Zealand's primary resources.
The report should detail:
- the primary product
- the method by which the increased processing will be achieved
- the amount of the increase in processing of that product likely to occur (in dollar or volume terms)
- how the increase is linked to the investment
- the timeframe in which the increase will occur
- any uncertainties or contingencies relating to achievement of the benefits under this factor, and
- what benefit will accrue to New Zealand (or any part of it) or group of New Zealanders as a result of the increased processing of primary products.
The increased processing could be carried out by another party and could only be indirectly linked to the investment (for example creating a dairy farm is likely to result in increased processing of milk products in New Zealand). The more direct the relationship between the investment and the increase, the more relevant the factor will be.
The processing of a primary product will add value to the product, thereby improving export returns, creating job opportunities needed in the processing or manufacturing stage and may facilitate the introduction of new technology into New Zealand markets. Accordingly, an investment assessed positively against this factor may also likely to be assessed positively against other factors.
Activities such as silviculture do not constitute processing of primary products - that is tending to the primary products prior to harvest.
