Wellington, Dec 9 NZPA - The Government and Federated Farmers are at odds over "factory farming" of dairy cows after Prime Minister John Key said it could have a negative impact on New Zealand's international free-range brand.

Three companies have applied to set up 16 new farms in the central South Island's Mackenzie Basin, keeping up to 18,000 cows in cubicle stables 24 hours a day for eight months of the year.

In Parliament yesterday Prime Minister John Key said the Government didn't support it and Agriculture Minister David Carter had asked for urgent advice about how it was affected by the animal welfare code.

Federated Farmers said the "so-called factory farming" cut costs, was environmentally friendly and would not tarnish New Zealand's international reputation.

The Greens were the first to raise a red flag about the applications.

Co-leader Russel Norman said the Government had the power under the Resource Management Act to deal with matters of national significance.

"If this isn't one such issue, what is?" he said.

"Proposals to keep cows in cubicles that they don't leave for eight months of the year are a radical departure from our tradition of farming stock outside and on pasture, and could do immense harm to our clean, green international brand."

Dr Norman said that when word got out overseas that New Zealand butter came from factory farms, the country's competitive advantage would disappear.