No rights to access Saudi farm, despite millions spent on it

Almost 1000 breeding ewes from New Zealand were air-freighted over. Photo / File

New Zealand spent more than $11.5 million to help establish a demonstration farm in Saudi Arabia - but does not have any contractual rights to access it.

Taxpayer money was spent on the farm near Dammam, which included the air-freighting of almost 1000 breeding ewes from New Zealand.

The farm is entirely owned by businessman Sheikh Hamood Al Ali Khalaf's Al-Khalaf Group.

A key justification for New Zealand's spend has been that it can be used to showcase Kiwi agribusiness.

The farm is privately-run, and New Zealand Trade and Enterprise (NZTE) has confirmed in correspondence to the Taxpayers' Union that it has no rights of access to the privately-run farm.

"The Saudi farmer can lock the gate and New Zealand officials can do zip," said Taxpayers' Union executive director Jordan Williams.

"The very investors this Agri-hub targets are also the very competition the Al-Khalaf group will hope to avoid. Why would the Al-Khalaf group allow access?"

NZTE says in the correspondence that it has a close working relationship with the Al Khalaf Group, and access can be arranged through it.

Recent visitors to the farm include two agricultural delegations hosted by Al Khalaf group and a New Zealand company, with more visits expected once it is completed.

Mr Al Ali Khalaf's Sydney-based business partner, George Assaf, has said the farm fit-out was done to "compensate" the pair for New Zealand's ban on live sheep exports for slaughter.

The 2003 ban, implemented by the Labour Government and extended by National, had cost them hundreds of millions of dollars and the fallout was a reason for a stalled regional free trade agreement.

Yesterday Foreign Minister Murray McCully released a document that was previously presented to Cabinet in February, 2013, and that made the case for New Zealand's investment in the farm.

It the document, he warned that tension resulting from the ban on sheep exports "poses a major threat to New Zealand's trade and economic interests".

"Even if we achieve nothing more than the removal of the source of major aggravation in the relationship, while creating a hub for New Zealand businesses to launch into the Middle East and Africa, [the farm] proposal would be justified," Mr McCully wrote.

Mr McCully said the Saudi investors had indicated they had received legal advice suggesting they pursue a claim for between $20 million and $30 million.

They had been encouraged by ministers in the previous Labour Government to purchase New Zealand farms in order to supply lambs for slaughter to the Saudi market, Mr McCully wrote.

After touring Saudi Arabia and other Gulf states in April, Prime Minister John Key told media there was no longer an issue of a disgruntled Saudi investor opposing a deal, however he said Saudi Arabia was not as enthusiastic as other members.

Green MP James Shaw, who has gone on the attack over the farm deal in Parliament this week, said the business justification for the farm deal was looking shaky.

"It is starting to look more and more like this was a pay-off to a disgruntled, influential businessman, rather than a genuine business deal."