Prime Minister John Key said this week that he would be concerned if large tracts of New Zealand land were being sold to foreign investors.

But data compiled by the Overseas Investment Office shows we are doing just that.

But how much does foreign ownership of land drain our economy? And could we actually grow without foreign investment?

Debate about overseas ownership of farmland has been heightened by a bid involving Chinese investors UBNZ, fronted by Auckland businesswoman May Wang, to buy 16 farms from receivers of the Crafar empire.

But they are not the first to want a slice of agricultural Godzone.

A Weekend Herald investigation of consents granted under the Overseas Investment Act shows at least 24 countries have been given approval to invest in the agricultural sector, covering 154,855ha and a wide range of sectors from sheep farming to viticulture.

The Overseas Investment Office is currently assessing seven applications involving land totalling about 3678ha.

A tender process for the 16 former Crafar farms closed this week and included a bid from state-owned Landcorp Farming.

However, the receivers have already signed a sale and purchase agreement with UBNZ Funds Management for the farms, conditional on consent from the Overseas Investment Office and structured so they can accept any better or more favourable offer.

Under the Overseas Investment Act 2005 any non-urban land of 5ha is deemed "sensitive" and needs approval, while farmland must be offered on the open market before consent can be granted.

Westpac chief economist Brendan O'Donovan says foreign investment generally has been an integral part of New Zealand's growth.

"Because we've always had a capital shortage and we've been very dependent on foreign funding and foreign firms," O'Donovan explains.

Foreign direct investment in New Zealand is currently about $92 billion in total, he says.

"By and of itself there's nothing that you need to be particularly scared of."

New Zealanders buy into foreign companies and land, he says. "If you expect to be able to buy land in other countries then you've got to be prepared to sell it here."

Although it is notable that New Zealanders cannot buy land in China, O'Donovan says.

"The key thing in all of this is to set clear rules because what we're talking about is property rights, you can't go changing the rules midstream," he says.

"If there's any no-go areas for foreign investors then it should be put on a register so it's clear ... and everyone knows what the rules are."

Land sales are more emotive than other assets because people have a perception the family silver is being sold, he says.

"There's a limited difference between a foreigner owning a company here versus the land underneath that company.

"The question is always what do you do with the money [from] the asset that's been sold," O'Donovan says.

"If you think that you can invest it either somewhere else in New Zealand or overseas and generate a greater return on it, then where's the issue."

In May Agriculture Minister David Carter was reprimanded by John Key for publicly remarking that the sale of the Crafar farms to interests associated with Natural Dairy (NZ) Holdings - a 20 per cent shareholder of UBNZ Assets Holdings - was unlikely to go through.

But this week Key, who was visiting South Korea and China, said that as a general principle New Zealanders should be concerned if huge tracts of productive land were sold.

"Looking four, five, 10 years into the future I'd hate to see New Zealanders as tenants in their own country and that is a risk I think if we sell out our entire productive base," Key said.

The Government last year announced a review of the Overseas Investment Act 2005 with the aim of encouraging the flow of investment into the country while addressingvalid concerns about foreign investment.

Federated Farmers president Don Nicolson says overseas investment is absolutely vital.

"Without it we would certainly be not enjoying the modern society we have."

Although concerns about the purchase of land by overseas investors can be legitimate, Nicolson says.

"The complexities are not helped by various company structures that might hide where the real influence of the purchase is coming from.

"So that aside I think it's very important that we have reciprocal rights for purchasing in the countries that may be willing to invest in our land and assets here.

"We can only lease [land in China] so at best people are saying surely these people should only be able to lease land in New Zealand."

New Zealanders buy land in North and South America, Australia, South Africa and central Europe, he says.

"I think if you talk this through with people clearly they need to understand that we need capital flows into this country ... and when you start going through how it plays out people do back up."

Federated Farmers is reviewing its position on foreign ownership.

"Our position of old has been that, well they can't take the land with them, provided they acknowledge New Zealand law and institutions and provided they pay taxes in New Zealand then what is the issue?" Nicolson says.

"We want to have capital flow into this country - the last thing we need is anything that would spook capital flight."

Green Party co-leader Russel Norman says buying land is different from investing in other forms of capital because it is a finite resource.

"So our approach is that we want to retain New Zealand ownership of land," Norman says.

"Obviously it would stop [overseas] people buying land which would be a great thing because it's not like the land disappears if the overseas investors don't buy it.

"All it means is that the price isn't driven so high, which is fantastic because the price of rural land has been driven so high that it's very difficult for New Zealanders to afford it at the moment."

If overseas investors buy existing assets, then it is hard to see how it contributes anything to the country, Norman says.

"If you just buy up Crafar farms and the milk that was being processed through a Fonterra plant now gets processed through a Natural Dairy plant, what's the advantage for New Zealand?

"Nothing new's created, there's no new value."

New Zealand agricultural land is immensely valuable in a world that is short of food, he says,

"It's only going to get more valuable as time passes, so we're going to get lots of overseas interest."

If the country kept selling productive assets it would add further to the deficit which had to be funded by borrowing more money or selling more assets, Norman says.

"It's a spiral," he says. "We sell a bit now to cover the fact that we're running an investment income deficit but all it does is add to the future investment income deficit, and that's what we've been doing for the last 20 years."

Gross national income as a percentage of gross domestic product has declined from 98.8 per cent in 1972 to 93.3 per cent in 2009, although inflation-adjusted gross national income per head grew from $28,619 to $42,885 during the same period.

Another issue is the potential for competition with dairy co-operative Fonterra, Norman says.

"Why would we want to have two New Zealand-based companies competing with each other in overseas markets. That's nuts. Where's the advantage for New Zealand?"

Fonterra chairman Sir Henry van der Heyden in the Herald's latest Mood of the Boardroom study says low-cost pastoral agriculture is New Zealand's point of difference and warned the country must be careful not to give away its competitive advantage.

"Or we will pay the price," van der Heyden says.

Van der Heyden wants to start a public debate over who should own prime pastoral land and questions why, given our temperate climate and soil and water resources, land is not seen as a strategic asset.

"Why shouldn't it be under [New Zealand] control and ownership?"