The Chinese Government-backed Shanghai Pengxin bid for the 16 Crafar farms has been approved - but under strict conditions including that the owners continue to be of good character, must invest $14 million in the properties, and cannot become majority owners of milk processing facilities in New Zealand.
But the bid is still subject to judicial review from a competing bid from the Sir Michael Fay-led consortium Crafar Farms Purchase Group, which called the decision that made New Zealanders tenants in their own country "wrong in law".
Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman today announced that they have accepted the recommendation of the Overseas Investment Office (OIO) to accept the bid from Milk New Zealand, a subsidiary of Pengxin.
"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," Mr Williamson said.
Milk NZ intends to engage Landcorp Farming Limited (Landcorp) to manage the farms. If an agreement between Milk NZ and Landcorp cannot be reached, Milk NZ will have to sell the properties.
The decision, which the ministers had final say on, is likely to be met with staunch criticism by the Labour, New Zealand First and Green parties.
Labour leader David Shearer said the Pengxin bid had no value for New Zealanders.
"Landcorp, the Kiwi state-owned enterprise which itself made a bid to buy the farms, will now be paying a Chinese Government-backed company a touted $18m a year to rent and manage the farms for it.
"This latest decision will be a massive kick in the guts for the local group of iwi and farmers who also put in a bid. They were very keen to take over the land and make it productive again. That would have provided jobs for Kiwis, not seen profits disappear offshore."
New Zealand First leader Winston Peters said the decision was "economic treason".
"New Zealanders have every reason to feel outraged and betrayed. Our country is being run for the benefit of foreign companies and the international money industry.
"We call on every concerned citizen to flood the Prime Minister and every National MP with messages of disgust at their lack of loyalty to the country they live in."
The Crafar Farms Purchase Group immediately put out a statement confirming it would proceed with a judicial review launched earlier this week. It said if it won, it would divide the farms among its members, including North Island farmers, iwi groups and Sir Michael, with no single member owning more than two farms.
Member were happy for legal restrictions to be placed ensuring farms cannot be sold to foreigners, the group said.
The judicial review claim is expected to be heard in the Wellington High Court next week.
The group questioned the dairying experience of Pengxin, but the Government said relevant business acumen and experience was one of the tests that Pengxin had to pass.
The Government described Pengxin as a fast-growing agribusiness that had invested in sheep breeding, wheat, soy and maize production in China and South America. Pengxin will also employ two New Zealand directors and an independent chairman to the board of Milk NZ.
The ministerial approval of the Pengxin bid follows the receivers, KordaMentha's, acceptance in late 2010 of bid for the farms.
Milk NZ claims its bid will upgrade the farms and create jobs for New Zealanders, increase competition and supply high quality dairy products into the Chinese market.
Conditions of consent to be policed by the OIO will ensure that Milk New Zealand's investment benefits New Zealand.
* The individuals with control of Milk NZ must continue to be of good character
* Milk NZ must invest a minimum of $14m in the properties
* Milk NZ and their associates must not acquire an ownership or control interest in milk processing facilities in New Zealand unless a 50 per cent or more ownership or control interest in those facilities is held by non-overseas persons
* Milk NZ must establish an on-farm training facility for dairy farm workers and must meet the capital cost of establishing this facility
* Milk NZ must give two scholarships of not less than $5000 each year to students of the on-farm training facility with the first two scholarships to be awarded by 31 December 2013
* Milk NZ must use reasonable endeavours to assist Landcorp to extend its business to, and market its products, in China
* Milk NZ must provide public walking access over Benneydale Farm and Taharua Station, in consultation with the Department of Conservation and the New Zealand Walking Access Commission
* Milk NZ must take reasonable steps to protect and enhance existing areas of significant indigenous vegetation and significant habitats of indigenous fauna and flora on the properties
* Milk NZ must register a heritage covenant in respect of the Te Ruaki pa site on Tiwhaiti Farm
* If required by the Office of Treaty Settlements, the applicant must transfer the Nga Herenga pa site (approximately 1.6ha on Benneydale Farm) to the Crown for nil consideration.
The 16 Crafar farms have a combined area of approximately 7893 hectares.
In the past two years, consent was granted for overseas persons to acquire 357,056 hectares of agricultural land.
Consents granted involving agricultural land by country of majority ownership, are:
* United States to acquire 25,306 hectares of farmland
* United Kingdom 22,600 hectares of farmland
* Switzerland 9727 hectares of farmland
* Germany to acquire 6834 hectares of farmland
* Australia 3861 hectares of farmland
* Hong Kong to acquire 759 hectares of farmland