Chinese farm purchase prompts 'xenophobia' row in NZ election

WELLINGTON - New Zealand's main farming organization on Sunday expressed unease about Chinese food giant Shanghai Pengxin Group's planned purchase of a major dairy holding as the political row over the proposed sale deepened with accusations of xenophobia.

Federated Farmers President William Rolleston said the sale of the central North Island Lochinver Station, which is still subject to approval by New Zealand's Overseas Investment Office (OIO) and Chinese authorities, "may not provide sufficient benefit to New Zealand."

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"New Zealand absolutely needs foreign investment, but it has to be of benefit to the local and national economy," Rolleston said in a statement.

The OIO had to assess the proposed sale on whether it had "substantial and identifiable benefit" over and above just making a farm work better, which a New Zealand buyer could also promise.

"Since Lochinver Station is highly regarded in farming circles, there must be something very special and we are keen to know what that is," said Rolleston.

Lochinver was close to 16 other North Island dairy farms that Shanghai Pengxin bought in 2012, which would increase speculation that vertical integration -- control of the entire dairy process from farm to processing -- was likely, he said.

"The reality is that here, no one knows how much of our farmland or housing is foreign owned. To base critical economic policy decisions around a hunch is unacceptable."

Shanghai Pengxin's intentions became a political issue in the run-up to the Sept 20 general election when the fledgling Conservative Party on Friday revealed the plan to buy Lochinver, saying it was being kept secret from the public for fear of a backlash against sales of productive land to foreign interests.

The Conservative Party and opposition parties have called for tighter rules on land sales to foreigners and for a register of foreign-owned properties.