With Labour’s bid to cultivate a fear of foreigners buying houses failing to sprout in the polls, the party is now looking to sow the same message to a more fertile field. The farming sector.

In an recent Q+A interview on the plummeting dairy price, party leader Andrew Little noted that some heavily indebted farmers may be forced to sell their properties if soft commodity prices do not pick up next season. Those sales to Chinese and US buyers could see the country “lose control of [the] productive sector”.

Little is correct in that the current slump is likely to see some highly leveraged farmers being forced to exit the sector. However, with all due respect, he may be overstating the case on a number of fronts.

He assumes that should prices fall further, every dairy farmer in the country will face certain ruin because of unsustainably high debt levels. Yet there are farmers out there who manage their finances prudently and who have weathered tough commodity cycles before.

Should the falling dairy price drag down the price of land, why wouldn’t these well-capitalised farmers use the opportunity to expand their position in the market, or even shift the land to its next most profitable use?

Even if offshore buyers do see this as an opportunity to enter the market, the Overseas Investment Act sets such a high threshold to entry (we say too high) that it is unlikely to result in a foreign fire sale.

Even when foreigners do buy Kiwi assets, they cannot take the land with them. This is illustrated by Shanghai Pengxin’s announcement that it was putting the Crafar Farms up for sale less than three years after acquiring them for $200 million.

There are also pluses from foreign capital, such as the potential to boost domestic productivity. China’s Bright Dairy invested $150 million into Synlait after Kiwi investors showed no interest in the firm’s capital raising in 2010. The Canterbury-based (and now NZX-listed) milk processor is a success story and currently forecast to pay out a farm gate price of $5.50 for the 2015/2016 season.

Our research makes the case that New Zealand’s economy will benefit from more foreign investment, not less. Politicians like Andrew Little would do well to factor this into their policies if they want to encourage a flourishing economy.