An American university is buying a New Zealand dairy farm for more than $28 million as officials and would-be overseas investors get ready for new rules.

Harvard University's endowment fund has been given Overseas Investment Office (OIO) approval to buy the 1300ha Big Sky farm near Patearoa.

Debate about overseas ownership of farmland has been heightened by a bid from Chinese-backed Natural Dairy (NZ) Holdings to buy 16 dairy farms from receivers of the Crafar empire.

Natural Dairy spokesman Bill Ralston said the company had always been confident about its application.

"What Natural Dairy has put forward is obviously significantly more beneficial to the New Zealand economy, the tax take and the employment of New Zealanders than what even Harvard is offering," he said.

"I don't think it's getting different treatment from the OIO or Government necessarily, but it may be that the New Zealand public sees investment by a Chinese firm in a different light to investment by an American entity."

Murray Horton, of the Campaign Against Foreign Control of Aotearoa, said it did not matter if investors were Chinese or American - the sales were not good for New Zealand.

The Harvard purchase was "a further example of alienation of what is the main engine of the New Zealand economy and once it's gone it's gone," Horton said.

"[We would like] at a bare minimum a moratorium on land sales to foreigners so that an informed debate can take place and out of that ... let's have a decent policy that puts the interests of New Zealanders first."

Harvard owns another Maniototo dairy farm, Helenslea, as well as forestry interests in the North Island.

Harvard Management Company says on its website that its "singular mission is to produce long-term investment results to support the educational and research goals of the University".

Blue Sky, which has changed its name to Dairy Farms Partnership, will continue as usual, with no job losses.

Finance Minister Bill English last week said new rules on overseas investment increased ministerial flexibility to consider a wide range of issues when assessing overseas investments in sensitive land. He said the measures provided extra clarity and certainty for potential investors and the OIO.

Horton commented: "At least they haven't done any more to throw the door wide open."

The new regulations are expected to take effect during December.

David Boswell, partner corporate and commercial at law firm Bell Gully, said it was difficult to say what difference the new rules would have made to the Harvard purchase, mostly because a directive letter and regulations had not yet been published.

Assuming Harvard continued to supply Fonterra, it would not be a problem.

- additional reporting Otago Daily Times