State-owned Landcorp has denied it will have to pay rent to the Chinese company that wants to buy the 16 Crafar farms if the deal goes through.

The Government is for a second time considering the Overseas Investment Office's recommendation as to whether Shanghai Pengxin can buy the farms, after the High Court sent the issue back for reconsideration.

A decision is expected this week.

If the deal goes through, state-owned enterprise Landcorp would manage the farms under Chinese ownership.


New Zealand First leader Winston Peters last week said that meant Landcorp would end up paying about $18 million a year to the landowner.

"In other words, a New Zealand SOE would end up being a tenant of a foreign company in New Zealand."

Landcorp chair Jim Sutton today denied it would have to pay any rent to Shanghai Pengxin.

"No, we won't be paying rent. We'll be a share-farmer. A share-milker," he told TVNZ's Q+A programme.

He also denied the Landcorp board was split over the deal, saying that was "absolute nonsense".

"No, there has been no division within the Landcorp board over this issue at all."

Landcorp did not stand to lose much if the Shanghai Pengxin deal did not go through, but New Zealand had a big stake in it.

"We risk pointlessly chilling the most important economic relationship we have, pointlessly chilling it."


Mr Sutton said politicians of all stripes needed to take a stand on discriminating against particular buyers.

If more restrictive rules for foreign ownership of farmland were introduced, they needed to be clear and applied "without fear or favour" to everyone wanting to buy a farm.

New Zealand's most important economic relationship was with China and it was important to sustain that, Mr Sutton said.

"For New Zealand, what is important is secure access to the major markets of the world, particularly the one that is already our most important market - China.

"What's important for China in a way that New Zealanders probably don't really conceive is food security, and that is why I think they want a bit of skin in the game in this joint value chain between New Zealand and China."

Green Party co-leader Russel Norman said that as a share-milker, Landcorp would have to pay rent to Shanghai Pengxin.

"Clearly, what a share-milker does is they hand over a proportion of the production to the owner of the land in lieu of rent. It's a kind of rent," he told Q+A.

Dr Norman said a government-owned entity was facilitating the sale of land into overseas ownership.

"And if, like me, you think that the sale of land into overseas ownership is a strategic problem for New Zealand's economic future, then it does seem a very strange thing for a government SOE to be doing."

Dr Norman agreed there was a need to be careful not to encourage anti-Chinese sentiment, saying the Greens had taken a consistent approach to foreign land ownership, regardless of nationality.

"But nonetheless, we do need to make the case that food-producing land is only becoming more valuable, and you'd be a mug to sell the goose that lays the golden egg."

New Zealand businessman David Mahon, who runs Mahon China Investment and has lived in China for 25 years, said the Crafar deal was being watched closely there.

"The deal's being watched by particularly Chinese dairy companies who have a single interest, and that is to try and get protein from New Zealand - not so much land," he told Q+A.

"But there is a view here, I think, in certainly government circles that Chinese investment has been singled out from other investment, and there is a prejudice simply because if it's Chinese investment. And so, in a sense, New Zealand is under some scrutiny."

There was a risk of New Zealand's reputation being tarnished in Asia, he said.

"If this doesn't go through, New Zealand will have a lot of repairing to do across Asia and certainly in China."