"Although it is technically not an underwrite because as the event owner council will carry any financial risk," Mr Weston said.
"It's not possible at this stage to give an exact amount, but if the event were to break even, council's financial contribution would be about $100,000.
"The event has previously been projected to break even in each of the first five years."
Mr Weston said the overall event budget was $1.8 million.
"Expenses associated with the event, including the purchase of the cosmetic mud powder, are paid out of the overall event budget which includes contributions from the council, government, sponsorship and ticket sales."
Meanwhile, any mud imported from South Korea into Rotorua will be treated first to ensure it's sterile, according to MPI.
MPI posted the statement on its Facebook page, following concerns about the importation of mud after a recent outbreak of food and mouth disease in South Korea.
"MPI is aware of the potential upcoming import of mud from South Korea and we have been working with the Rotorua [Lakes] Council to ensure that there are no biosecurity risks associated with this shipment," the statement read.
"All imports of risk goods including plants and soil or clay must meet our strict biosecurity standards before being allowed into New Zealand. The product in this case, is clay (but called 'mud') that would be milled and filtered to remove any possible organic material, then heat-treated to between 70 and 80 degrees for 72 hours, before being crushed into a fine powder. The mud is finally irradiated at 10 kilogray before it is imported.
"These treatments will make the mud sterile, therefore removing any biosecurity risks.
"To ensure the mud is safe, MPI will verify that the treatments have been applied before providing clearance."
Meanwhile, Kiwifruit Claim chairman John Cameron said it was not worth the risk to any of New Zealand's primary industries for MPI to approve importing the mud.
"Our primary industries are worth billions to our economy every year.
"Any outbreak of any diseases could cost people their livelihoods, their farms and jobs and would be devastating to the entire New Zealand economy. Has MPI learnt nothing from the PSA outbreak in New Zealand seven years ago?" he said.
"Like PSA, foot and mouth is a known disease. Given that South Korea has recently had an outbreak of foot and mouth, MPI needs to be 100 per cent sure that this mud is disease free - if there is any risk at all of that mud being contaminated with foot and mouth, then the import needs to be stopped."
He said MPI had sole responsibility for protecting borders, and the primary industry sector relied heavily on it carrying out that function to the highest standard.
On Thursday, Rotorua MP Todd McClay said he had written to Primary Industries Minister Nathan Guy requesting urgent clarification on the issue, following approaches by mainly rural constituents.
Also on Thursday, Rotorua Lakes Council discussed and rejected a motion to cancel the purchase of the mud, which is costing $90,000 over five years.
The council has also put up a frequently asked questions page on its website concerning the festival. For details visitwww.rotorualakescouncil.nz/our-council/Mudtopia.
Mudtopia festival
- Total budget of $1.8 million for year one
- Rotorua Lakes Council will cover up to $500,000 if the festival makes a loss
- Funding includes a Government grant of $1.5 million spread over five years
- Other funding streams are from sponsorship and ticket sales
- Will be held at Arawa Park racecourse on December 1-3
