Any non-urban block bigger than five hectares, or agribusinesses worth more than $NZ100,000, must win the approval of NZ's Overseas Investment Office (OIO).
Overseas investors or companies can be denied access to farmland for various reasons including not showing business experience or acumen relevant to running farming investments, not being of good character, or not proving a financial commitment to an investment.
Land purchases must occur on the open market so NZ residents are aware and able to bid in competition with overseas investors.
Investors are also expected to bring business activity that is in NZ's interests, which may include creating new jobs and technology opportunities, or retaining NZ jobs that otherwise might be lost.
Offshore buyers who chose to reside in NZ get priority approval attention.
The careful Kiwi approach to scrutinising and restraining foreign investment in farmland could provide Australia with some useful guidelines to help quell local fears about overseas-backed land buying sprees, according to Federated Farmers of NZ (FFNZ) chief executive officer Conor English.
"If you're a foreigner you actually have to bring greater benefits to your investment in NZ than the local guys," he told the recent Australian Farm Institute land management conference.
New business skills, greater market competition, business productivity, and improved services were all factors foreign investors were likely to be expected to deliver if they wanted OIO approval - conditions generally supported by FFNZ.
While Canberra has ruled out creating extra hurdles to block foreign acquisitions in Australia, it is moving to start a register of foreign-owned agricultural land.
Australian farm bodies have welcomed efforts to improve understanding about what offshore interests are tied to rural land purchases and how to monitor any compliance issues.
With Australians increasingly uneasy about the lack scrutiny of foreign investment in agriculture, Mr English said capturing the right information was a critical starting point.
NZ's policies had evolved over decades because of considerable offshore investment in many aspects of NZ life.
"Some people are concerned our rules aren't tough enough, others want them relaxed a little, but the Federated Farmers supports the current model, which may or may not be of relevant to Australia.
"I couldn't say whether you guys should adopt what we do, but it's a framework that's appreciated in NZ."
Since 2010 NZ land sales assessments and approval laws have been further fine-tuned in response to rising public concern about large scale land aggregation by offshore investors.
In two recent high profile cases, overseas bids large scale land sales by debt-troubled Hong Kong backed investor May Wang and German media entrepreneur Kim Dotcom were blocked after both failed the good character test.
Another Shanghai-based bid for the 16 dairy Crafar farms aggregation was being challenged in the NZ High Court by a local syndicate keen to apply the investment act in its favour despite the Chinese company winning approval to buy the farms in January.
But Mr English said there was little indication that sound foreign investment was being hampered by the Overseas Investment Act.
In the past 10 years 200,000ha had been approved for sale to offshore investors - mostly sheep and beef properties - equivalent to less than 2 per cent of NZ's total 11.3m hectares of pastoral country.
While much local debate centred on Asian interest in farms, particularly dairies, only 21,100ha of NZ dairy country was owned by foreigners and total Asian investment in NZ farmland was "minuscule" compared to land owned by Australians, Americans or Europeans.
In fact, NZ's non-farm assets were of greater interest to foreign investors, particularly Australia, Mr English said.
Australia was the big force in NZ's banking industry, owning all four of the nation's big banks - Westpac, The National Bank (owned by ANZ), ASB (Commonwealth Bank) and Bank of New Zealand (National Australia Bank).
In 2009 more than two thirds of the value of NZ's finance and insurance sector was foreign owned (an investment worth $NZ200b), as was 9pc ($NZ27b) of the manufacturing sector, and 71pc of NZ forests.
This compared with just 1pc ($NZ4.8b) of the total value of NZ farmland.
However, Mr English said given NZ's agriculture borrowings totalled around $NZ47 billion (only about $5b less than Australia) Australian banks technically had a vested interest in encouraging foreign investment in NZ farming to help keep land values on a firm footing.
He said since 2009 property sales activity had been depressed, so capital from overseas bidders was welcomed by financial institutions who had big exposure to land valuations, and also potentially by farmers who did not want to see their own farm values slide.
"The short interpretation is simple. If you're selling land you probably like foreign investment because it can mean a better price than otherwise would be the case," he said.