A taxpayer grant of $11 million to farm wagyu cattle will benefit an overseas businessman at the centre of the Saudi farm controversy.

Foreign Minister Murray McCully has come under intense pressure over his support for a deal which saw about $11.5 million spent on Hamood Al Ali Khalaf's farm in Saudi Arabia.

The Herald can reveal a business part-owned by Mr Al Khalaf is part of a separate venture receiving millions in taxpayer money to export grass-fed wagyu beef - including to the Middle East.

The Ministry of Primary Industries (MPI) has put up $11 million and partnered with Brownrigg Agriculture and Firstlight Foods on the plan.


The money will be spent over seven years with the aim of selling New Zealand grass-fed wagyu beef overseas, through a new company, Grass-fed Wagyu.

The project began in 2012 and $2.3 million of the grant has been used so far.

In January, Mr Al Khalaf's Awassi NZ Land Holdings bought a 25 per cent share in Brownrigg.

The $11 million spend on the wagyu project is part of the Government's Primary Growth Partnership (PGP) programme. Set up by then-Agriculture Minister David Carter in 2009, by November last year the Government had committed $322 million to 18 programmes.

Labour's primary industries spokesman, Damien O'Connor, said although Mr Al Khalaf's share in Brownrigg came after the PGP was awarded, it still didn't sit right.

The programme was a "slush fund" for corporate groups that had generally backed the Government, he said.

"We are not opposed to the idea of incentivising better research and development, but it must be for real, additional benefits to our economy. And those benefits must accrue to New Zealanders, first and foremost."

An MPI spokesman said the wagyu beef programme was subject to a range of monitoring and governance requirements. Brownrigg and Firstlight Foods had committed $12 million of their own money, he said.


A report would be released next month.

A spokesman for Primary Industries Minister Nathan Guy said an independent review of PGP by the NZ Institute of Economic Research estimated it would add $6.4 billion to the New Zealand economy by 2025.

MPI said it was pleased with the programme's progress, with strong sales growth across all markets, including from a sales base in the United Arab Emirates. New markets including Saudi Arabia would be explored.

David Brownrigg, managing director of Brownrigg Agriculture, said Firstlight Foods managed all global distribution and marketing responsibilities, and it had not had any discussions with business interests associated with Mr Al Khalaf.

Mr Brownrigg said he thought Brownrigg would have been approved for the PGP if Mr Al Khalaf had been a shareholder at the time.