Landcorp Chief Executive Chris Kelly has his head firmly buried in the sand if he can't see a conflict in supporting an overseas bid for the Crafar Farms, says New Zealand bidder Sir Michael Fay.

Sir Michael, one of the bid group of Central North Island dairy farmers and Iwi seeking to buy the 16 Crafar farms says the bid is effectively being "kneecapped" by Landcorp says Sir Michael.

"Landcorp is lending a New Zealand face and New Zealand expertise to an overseas bid that fails to meet the Overseas Investment Office test of adding value to an asset," says Sir Michael. "Shanghai Pengxin admits it knows absolutely nothing about dairy farming.

Landcorp's involvement is nothing more than an attempt to sanitise a deal that stinks in the minds of most New Zealanders.

"Chris Kelly says Landcorp is doing a good deal to enhance dividends to the Government, Landcorp's owner. But Landcorp is effectively helping to shut out a New Zealand bid, competing against our own dairy farmers and flying in the face of public opinion polling that shows more than 80% of New Zealanders want the Government to actually step in and stop the sale of the Crafar farms to foreign buyers.

"Under its Statement of Corporate Intent Landcorp is supposed to have regard to the best interests of the community in which it operates. Clearly in this case it is direct conflict with the interests of the Central North Island farming community and the New Zealand public in general.

"It's no wonder so many New Zealand farmers have had a gutsful of Landcorp if they can't see this conflict. Perhaps Landcorp should be the first SOE to be sold off and the whole lot can be returned to New Zealand farmers who will certainly do a better job of running those farms than a Government department."

Sir Michael says the argument about Landcorp being charged with making good returns for Government was a stupid line to run to justify the SOEs involvement in the Shanghai Pengxin Crafar bid.

"The Government will do much better out of the 16 farms being retained in New Zealand ownership with all the dividends staying in New Zealand and all the wages, salaries, payouts and taxes flowing into local communities and the Government's coffers.

"Landcorp is at best an average farmer of the vast tracts of land it holds and generally returns much lower production figures than their neighbours. Now they are setting themselves up as tenant farmers of land that the public demands should be retained in New Zealand ownership.

"Where's the sense or their mandate for that?"