Some oyster farmers have accused the government of playing favourites over its decision to invest $3.3 million in Australia's Oyster Coast, and claimed the move would distort the market in the competitive industry.

Caroline Henry, chair of the NSW Farmers Federation Oyster Committee, said the investment was "not a good look for the industry".

“How can the government make informed decisions in an unbiased manner with a company that they actually have part ownership in?” said Ms Henry, who owns and runs an oyster farm on Wonboyn Lake on the state's south coast.

She said one potential conflict arises from the fact the Department of Industry runs the tender process for oyster leases.

"The tender will go to the person who puts up the most money. You now have a company that has millions behind it that can outprice everybody," she said.

Deputy Premier John Barilaro and Minister Andrew Constance, the member for Bega, announced in May the NSW government had acquired the $3.3 million equity stake in Australia's Oyster Coast (AOC) through its new GO NSW Equity Fund.

The fund was established last year in partnership with superannuation company First State Super and private equity firm ROC Partners, with the aim investing "$150 million in approved, high-potential companies which may not otherwise have access to suitable capital".

The government's stake in AOC was part of a $10 million co-investment, which included $6.7 million from First State Super.

ROC Partners have also invested an additional $10 million in AOC, taking the total investment in the company through the private equity firm to $20 million.

Bateman's Bay oyster farmer Kevin McAsh said many in the industry were concerned about the lack of transparency and consultation.

"There was no opportunity for any farmers to participate in this. The industry had no knowledge of it," he said.

A spokesman for government agency Jobs for NSW said the process did not involve applications or funding rounds. Instead, ROC Partners was "responsible for identifying opportunities that can create jobs which are recommended for investment under the equity fund".

"The AOC investment is managed at arms length by ROC Partners and Jobs for NSW has no role in day to day operations or management decisions of AOC," the spokesman said.

Recommended investments are also approved by the independent Jobs for NSW board.

ROC Partners managing director Michael Lukin said the investment was "the culmination of over six months of intensive due diligence by Roc Partners, which included "analysis of very significant industry-wide benefits" and "job creation and training in regional NSW."

According to the AOC website, the company was formed in 2013 by "leading oyster growers from eight estuaries south of Sydney and now boast over 40 growers as shareholders and a strong management team of business professionals".

The company's chief executive Mark Allsop declined to answer any of the Herald's questions, including on AOC's current financial position, and instead referred the inquiry to ROC Partners.

At the company's annual general meeting in November, AOC chairman David Trebeck told shareholders the company had reported a net loss of $241,000 during the 2016-17 year.

"This is slightly down on the $265,000 loss recorded the prior year," Mr Trebeck, who worked for the federal Liberal Party during the 1980s, said.

Mr Trebek's address was published on the company's website. The address and the bulk of the website has since been wiped.

Labor's primary industries spokesman Mick Veitch said the government needed "to explain why they used taxpayers’ money to buy into Mr Trebeck’s oyster company".

Asked why the NSW government had invested in a loss-making business, a government spokesman said it would "grow the industry, increasing NSW’s competitiveness, opening up opportunities in fast-growing export markets and benefiting oyster farmers across NSW".

The spokesman said AOC's growth "will not come at the expense of small operators who are unable to fulfil large overseas orders".

This is vigorously disputed by other farmers in the south-coast region.

“We can’t compete with people who have got so much money,” farmer Shane Buckley, who owns Wapengo Rocks oyster farm, said.

"Our tax dollars are now being used against us – basically we’re funding a big corporation to take business away from us.”

smh.com.au