WELLINGTON - The New Zealand government has approved an application by a Chinese-owned company to buy 16 dairy farms that have been in receivership in October 2009, saying they would boost dairy product sales to China.

Land Information Minister Maurice Williamson and Associate Minister of Finance Dr Jonathan Coleman Friday announced they had accepted the recommendation of the Overseas Investment Office (OIO) to grant consent to Milk New Zealand Holding Limited (Milk New Zealand), a subsidiary of Shanghai Pengxin Group Co. Limited, to acquire the 16 Crafar farms.

"It is clear that all criteria under sections 16 and 18 of the Overseas Investment Act 2005 have been met, therefore we accept the recommendation of the OIO to grant consent," Williamson said in a statement.

"We are satisfied that Milk New Zealand's application for consent meets the criteria set out in the Act," Coleman said in the statement.

The approval followed acceptance by receivers KordaMentha in late 2010 of Milk New Zealand's bid for the farms.

Milk New Zealand's acquisition would support the supply of high quality dairy products into the Chinese market and help set the foundations for further economic and export opportunities with China, said the statement.

Stringent conditions policed by the OIO would ensure that Milk New Zealand's investment delivered substantial and identifiable benefits to New Zealand, it said.

These included investing more than 14 million NZ dollars ($11.51 million) into the farms making them more economically and environmentally sustainable, it said.

However, a rival consortium led by New Zealand businessman Sir Michael Fay has threatened to seek a judicial review of the decision, arguing the farms were a resource asset that should remain in New Zealand ownership.