Questions over Saudi sheep farm venture

Shipments of live sheep are no longer allowed.

A Saudi businessman who invested tens of millions of dollars in Hawke's Bay, but lost the opportunity to export live sheep, has been "compensated" by taxpayers through a deal which involved air-freighting almost 1000 ewes to Saudi Arabia.

The government has spent $6 million establishing an "agri-hub" on a Saudi farm owned by Hmood Al Ali Al-Khalaf, an international businessman whose New Zealand investments include a large farming operation at Tikokino.

Peter Butler backs the venture.

It has been claimed setting up the agri-hub was necessary to clear the way for a free trade agreement with Gulf states following the ill-will created by the 2003 live sheep ban, which is said to have cost Mr Al-Khalaf hundreds of millions of dollars.

The agri-hub project included air-freighting just under 1000 breeding ewes from Hawke's Bay to the hub on Mr Al-Khalaf's farm at Um Alerrad, in October last year.

It has been reported that stockmen and a vet from Hawke's Bay travelled with the sheep.

The government's international economic development agency, NZ Trade & Enterprise, has said the Saudi agri-hub provides a platform to showcase New Zealand's agri-tech abilities to the wider Gulf region, with a view to boosting the country's export revenues.

Central Hawke's Bay Mayor Peter Butler, who farms in the region , said the agricultural link was positive.

"Anything which creates jobs in Central Hawke's Bay is a good thing," he said.

"And it is great to see someone else's style of farming."

About 30 private New Zealand agri-tech companies, along with NZTE, the Ministry of Foreign Affairs and Trade, and the Ministry for Primary Industries, have collaborated on the project.

Primary Industries Minister Nathan Guy said New Zealand companies who had committed to the agri-hub were "making a sound investment" by being involved in the Saudi project.

But a business partner of Mr Khalaf's, Sydney-based George Assaf, said this week the agri-hub project was set up to compensate the pair for hundreds of millions of dollars they lost as a result of live sheep shipments being banned after they invested in New Zealand.

Prime Minister John Key was in Saudi Arabia last month holding talks aimed at establishing a free-trade deal with Gulf states. Mr Assaf told TVNZ the agri-hub project was a compensation package required for the free-trade deal to progress, and it had appeased Mr Al-Khalaf.

"So far, he's happy," Mr Assaf said.

Mr Key said Mr Al-Khalaf was "not kicking up any issues anymore".

Mr Al-Khalaf has been involved in the New Zealand agriculture scene since the 1980s and invested millions setting up live sheep exports to Saudi Arabia before the ban, sparked by animal welfare concerns after thousands of sheep died in transit.

He was reportedly furious about the lost business opportunity.

The Taxpayers' Union, a government spending accountability watchdog group, said trying to secure a free trade agreement was "no excuse for a taxpayer handout to an individual businessman".

"If the businessman has a good case for compensation from our government, that process should be managed by lawyers, not politicians," Taxpayers' Union chief executive Jordan Williams said.