Federated Farmers is urging farmers to conduct strict due diligence checks before signing sale contracts in the wake of reports that a Maori trust claiming to have financial backing from Dubai World has been contracted to buy 28 farms in Southland for more than $150 million.
"It goes against every commercial norm for major capital items to be sold on a 'no-deposit' basis, and farms are as big a capital item as you can get," said David Rose, Federated Farmers rural security spokesman.
The Green Party also expressed concern that the trust was apparently negotiating with Dubai World - a subsidiary of the Dubai Government - to buy New Zealand farms to gain control of food supplies.
Large areas of New Zealand land would effectively be controlled by a foreign government if the deal went ahead, said Greens co-leader Russel Norman.
The benefits from selling the food would not kept within the New Zealand economy, but would instead be passed on to overseas interests.
Federated Farmers told its own farmers considering selling that they could contact its lawyers to discuss the deals, and suggested non-members take independent advice.
"I am extremely nervous of reports that no-deposits are being taken," said Mr Rose. "It's pretty fundamental that a deposit be exchanged as a tangible sign of good faith".
A second concern related to the financial backer: Dubai World - the Emirates' owned and controlled corporate lender.
On November 27, the federation warned that Dubai World was close to defaulting on a substantial part of its $US60 billion ($NZ82 billion) debt.
On Monday another Emirates state, Abu Dhabi, injected $US10 billion to save Dubai World from an immediate default.
"We are naturally concerned that the supposed backer may not be prioritising the purchase of Southland farms," said Mr Rose. "The fact that a reported deposit milestone has already been missed is further cause for alarm.
"It is imperative farmers obtain independent counsel as well as insisting on a deposit," Mr Rose said.
The Maori trust has contracted to buy nearly 30,000ha of dairy, sheep, beef and deer farms throughout Southland, but some sellers have raised queries ranging from delays confirming the sales contracts to deposits not being paid as expected.
Two of Southland's largest rural real estate companies, PGG Wrightson and Southern Wide, declined to deal with the trust, but the farms have been bought through other real estate agents.
A spokesman for the purchasers, Wynn Murray, told the Otago Daily Times the trust was a serious buyer.
It had financial backing, including from overseas, and sales contracts would be made final in late February or early March.
The delay was because of dairy farmers wanting to see out the milking season and deposits would be paid when contracts were finalised, he said.
Mr Murray, from Invercargill, declined to name the trust he represented or confirm it was being funded from Dubai.
He did confirm that an option was for milk from the trust's farms to be processed specifically for Dubai markets.
Mr Murray said the trust he represented was not aligned to a tribe, but made up of a group of individual Maori people from throughout New Zealand who had pooled their resources.
"We're just Maori people who have got together and decided, 'Let's do this'."
There was no Treaty of Waitangi settlement money involved.
He has been buying farms for the past three or four months and, while he had been told to stop, expected to resume again in the new year.
Mr Murray said farm managers and staff would keep their jobs under the new ownership, and product would be supplied to existing processors.