The lawyer representing a Hong Kong-based company bidding for New Zealand dairy assets says the company wants to control the dairy supply and distribution network involved, rather than simply buy New Zealand produce.
Natural Dairy NZ Holdings, which is registered in the Cayman Islands, has told the Hong Kong Stock Exchange it plans to buy farms, livestock and milk powder plants worth up to $1.5 billion.
The company's New Zealand-based lawyer, Kerry Knight, told Nine to Noon the firm doesn't want to buy New Zealand milk powder.
"What they want to do is control the entire process from the farm gate to the consumer's mouth."
Mr Knight says while Natural Dairy NZ Holdings has said it aims to invest $1bn - $1.5bn in New Zealand, their immediate specific target is Crafar Farms only.
The company is also looking at investments in Australia, he says.
"They are embarking on a fundraising at the moment. They have raised the first tranche, which is $150 million, and almost all of that money has been sent to New Zealand already."
The investors have also looked at 29 Carter Holt Harvey dairy farms converted from forestry blocks in the Central North Island that are on the market.
Mr Knight says the company will not necessarily invest the whole $1.5 billion, and if they get to $500 million, that could be it.
He says New Zealand's free trade agreement with China has attracted the buyers, which include wealthy businessmen with experience in distribution but little expertise in dairy farming.
Crafar Farms part of proposed deal
The Hong Kong company's purchases would include the 22 dairy farms formerly owned by Crafar Farms, which was placed into receivership in October last year.
Crafar Farms was New Zealand's largest family-owned dairy business.
Auckland-based KordaMentha was appointed receivers for Crafar Farms last October, following a request by two banks and a finance company which said they were owed about $200 million.
Michael Stiassny of KordaMentha told Morning Report a number of people have expressed interest in Crafar Farms but the offer from Natural Dairy NZ is the one it has been working on for some time.
"They've approached us ... and we have engaged with these parties because the price that they're offering is one that interests us.
"We haven't yet concluded (the sale), we may not conclude it, but we are working with their solicitor to get it to a point where we can sign it and then see whether it goes through (the Overseas Investment Office) or not."
OIO considers application
Overseas Investment Office (OIO) manager Annelies McClure says Natural Dairy NZ has filed an application for consent, but won't reveal what it is about.
She says it will take a week to do a preliminary assessment of the application, and up to 10 weeks to complete a thorough assessment.
Crafar Farms co-owner Alan Crafar says the potential sale is news to him, and says he has not had any word from the receivers for months about any developments to sell the farms.
The OIO is currently investigating the sale of two farms in Hawke's Bay and Taranaki to the company UBNZ Asset Holdings, owned by Natural Dairy NZ.
In the last financial year Natural Dairy recorded a loss of more than $23 million.
Fonterra 'most effective processor'
Fonterra chief executive Andrew Ferrier says he doesn't think it would be cost-effective for the Hong Kong investor industry to have their own processing plants in New Zealand.
Mr Ferrier says the Fonterra system is the most efficient system for processing milk.
He says the Government needs to think about the growing demand from overseas interests wanting to invest in the food sector here, and the implications for long-term food security.
Mr Ferrier says Fonterra has been involved in farming and processing in China, because the Chinese asked it to do so.
Federated Farmers dairy chairperson Lachlan McKenzie says the Crafar Farms would account for about $300 million of the company's total investment. He wants a meeting with the investors to find out more about their proposal.
Green Party co-leader Russel Norman says says the OIO has basically been a rubber stamp and the rules about overseas companies buying productive New Zealand land need to be tightened.
Dr Norman told Morning Report this kind of intervention into the country's primary production sector has not been seen before.