The proposed Omarama dairy farm development appears to have been planned for at least four years.
The developers have owned the land or had it under contract for some years, such as Williamson Holdings, which has owned about 1000ha on Killermont Station for four years and been waiting for approval to take water for irrigation.
The intention in that case was to source the water from the Ahuriri River, but the river has a national water conservation order on it that limits the amount of water that can be taken.
Sources have told the Otago Daily Times the river was fully allocated, and the only access available was to purchase an existing water right.
In the past few years, Solid Energy has leased land at Glen Eyries Downs from Southdown Holdings to grow oil seed rape for biofuels, but it was known that some of the crops failed because the land lacked fertility.
Sources say that in at least one case, the developer was speculating, taking advantage of cheap water and land to develop the business and then sell it.
Converting the farms could cost $45,000 to $50,000 a ha including land purchase, and the funds appear to be coming from wealthy individuals and investment companies both locally and overseas.
It was understood the recession had prompted a rethink by some investors on how to spend their money.
They had been drawn to the dairy industry because it was transparent, and farm performance could be measured each day by milk and by monthly cashflow.
One source familiar with the dairy industry and the Omarama area said the light soils would initially struggle to grow the high-quality feed needed by dairy cows until fertility improved.
This meant feed would have to be carted a long distance.
Others active in the dairy industry said New Zealand's reputation for keeping cows outdoors and taking them to the feed was recognised and respected around the world.
A search of the Companies Office reveals two companies, Southdown Holdings and Williamson Holdings, have a similar shareholding and board, while Five Rivers Ltd has one director and shareholder, Cornelius Zeestraten, of Amberley, Canterbury.
Southdown Holdings and Williamson Holdings are predominantly owned by investors from Tauranga, Mount Maunganui, Auckland and Australia, and the first board members were appointed in 2006.
A search of holding companies reveals common shareholders: Michael John Hope, who is listed as living in Dunedin and Australia, Richard Brandon Peacocke, Mount Maunganui, and Christopher Phillip Flavell, of Australia.
The two companies have the same registered office in Cameron Rd, Tauranga.
Mr Zeestraten was appointed a director of Five Rivers in 1994 and he has extensive dairy farming interests in Southland, but his company has attracted the attention of Environment Southland following a number of resource consent breaches related to effluent discharges.
Environment Southland compliance manager Mark Hunter said Union Station Dairies at Tussock Creek was fined $5000 by the Environment Court in in 2004 for such breaches, a further $15,000 in 2007, and $25,000 in August this year.
Mr Hunter said at least three other dairy farm-owning companies in which Mr Zeestraten had an interest had attracted Environment Southland attention.
Hillend Ltd has been issued with one infringement notice and two warning letters, Pebbly Hills three warning letters, two abatement notices and an infringement notice, and Southern Sight Ltd two warning letters.
