Finance Minister Bill English has doubts about the long-term future of Shanghai Pengxin.
"My own personal view is in the long run - this applies to Kiwi as well as offshore - corporate farming entities don't survive," he said. "And I know that sort of runs against the trend but I've seen the cycle two or three times."
The Chinese company is seeking approval from the Overseas Investment Office to buy the 13,800 hectare Lochinver Station near Taupo.
Farming was a "low return on assets" business, English, who has a farming background, told a group of businesspeople during a visit to Hamilton last week.
Not including capital gain, returns were 1 or 2 per cent. "Prices peak. When they start falling, the syndicates and the shareholders want to sell out. And if I was them I would, too, because if you don't live it and love it, you'll end up asset-rich and cash-poor.
"We've seen Tasman come and go, New Zealand Dairy Farms come and go, the Hubbard empire come and go, Solid Energy's empire has just been sold off without anyone noticing but the locals in the last few months.
"These guys [Pengxin], as much as they might not be saying it, they'll come and go. The owner-operator works. The Waikato's testament to it."
Federated Farmers national president William Rolleston said English probably had a point. "It's certainly seen over time that it's the family farmer who can trim the costs ... when he or she needs to.
"You don't see many corporates holding farms on an intergenerational scale. But that doesn't mean Shanghai Pengxin wouldn't be one of those. You can't be completely complacent about it."
Labour leader David Cunliffe said the prospect of Pengxin liquidating its assets was not a sufficient excuse for the Government, considering it had approved in total over a million hectares of land for sale to overseas buyers.
"Second issue is it's not a very good way to treat international investors to say, ‘You're welcome here because we know you're going to go bust'."
He said the balance in the industry was shifting towards corporate farming.
"An issue to be considered is whether the tax structure is currently a push factor there; the lack of a capital gains tax means in the dairy industry a lot of people have been buying up the farm down the road and offsetting the interest costs of that borrowing against the cash income that they would otherwise have to declare ...
"What that means is that people are farming essentially for capital gain instead of profit."
Rabobank's director of dairy research, Hayley Moynihan, said she could not comment on company-specific issues, but she did not expect a lot of corporate farming businesses to fall over next time things get tough.
"We certainly see a variety of models sustainable in the market place," she said. "Certainly the family-owned businesses have the been the core of New Zealand's farming success, but there are a variety of different models that are now becoming established."
She said the business model of corporate farming might have to change, but it was likely to have a place in the industry.
Steve Carden, chief executive of Landcorp, said he would not enter a debate with his shareholding minister (English), but he expected corporate farming to last the distance.
"We've been around for 27 years and we've only ever lost money in one of those years."