West Coast farmers doubt that a development fund should have invested millions of dollars in a failing dairy company.
Development West Coast made the $5 million equity injection into Cranley Farms in Westland earlier this week.
The development trust says its investment means Cranley Farms can double its milk production in five years and create 12 new jobs.
But Federated Farmers West Coast president, Katie Milne, says Cranley is a big equity partnership with some well-off people running it, and questions will be asked about why it needs public money to carry on.
She wants to know why a bank didn't leap at the investment if it is such a good deal.
The trust's chief executive, John Chang, says there were conflicts of interest with two shareholders but the trust made sure they took no part in the investment decision.
Development West Coast was set up as a charitable trust to manage and invest income from a $92 million fund given by the the Government in 2001 to compensate for the loss of native forestry.