Federated Farmers Dairy Chairman says the latest proposal by a foreign investor to buy into the dairy industry increases the risk of New Zealand's reputation being damaged.
A Singaporean company wants to buy a 19.5% stake in the Auckland based company Dairy Trust.
It follows Russian interests wanting to buy out Canterbury based New Zealand Dairies and a Chinese company buying Synlait, another Canterbury milk company.
Lachlan McKenzie from Federated Farmers says the investments were inevitable after the Government passed the Dairy Industry Restructuring Act.
He says that allowed the creation of Fonterra, but also forced Fonterra to help subsidise new entrants into the dairy industry by supplying them with cheap milk.
Mr McKenzie says overseas investors will see there is an opportunity to have a guaranteed supply of milk at a regulated price.
He says if New Zealanders don't have sufficient capital to take advantage of that, then inevitably it goes to overseas companies.
Mr McKenzie believes the biggest risk is an investment company which does not have the same quality standards as New Zealand, but sells the produce under a New Zealand banner.
He says that could tarnish New Zealand's reputation.
