The Government's spent millions of taxpayer dollars kitting out a farm with top-of-the-line New Zealand equipment and hundreds of sheep to "compensate" a Saudi businessman.

ONE News has learned that the Government has spent $6 million air freighting 900 pregnant ewes and farming equipment to Hamood Al Ali Khalaf's farm in Saudi Arabia.

According to Mr Al Ali Khalaf's business partner, Sydney-based George Assaf, everything from the fencing to "the shed and the wool shed and the yards and the drafting machines, the weighing, the scales, you mention it, it's all from New Zealand".

Mr Assaf says the deal was done to "compensate" the pair over a six-year-old ban of live sheep exports in which they say they lost hundreds of millions of dollars.

He says New Zealand was told "unless you fix that part of it, we won't sign" the free trade deal between New Zealand and the Gulf States.

It's said our treatment of the Saudi businessman is the reason the deal with the Gulf States has stalled.

New Zealand will receive no profit from the Saudi farm, which Mr Assaf claims is worth $80 million.

But, it provides New Zealand businesses with the opportunity to showcase their wares, according to Primary Industries Minister Nathan Guy.

Asked what return the country should expect from the farm, Mr Guy replied: "Ultimately it may help us land the free trade agreement."

The ban on exporting live sheep was put in place in 2009 after 4000 Australian sheep died en route to Saudi Arabia.

Mr Guy's positive about New Zealand's relationship with Mr Al Ali Khalaf.