Federated Farmers president William Rolleston, Labour Party leader Andrew Little and Primary Industries spokesman Damien O'Connor at the Federation's annual conference on Wednesday.

Labour has dropped its 2014 election policy to charge a resource rental on farmers who use water for irrigation and discharge too many nutrients.

Speaking to the annual conference of Federated Farmers, Labour Party leader Andrew Little said while there were "real environmental limits to growth", the party would discard the policy which had alarmed the farming community.

Prior to the 2014 election, Labour said a resource rental was the best tool for making sure freshwater was used efficiently.

Federated Farmers environmental spokesman Chris Allen welcomed Labour backing off from the policy as a "significant shift".

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"He [Little] acknowledged water quality was an issue, but also said 'we are all in this together'. We agree with him that measures need to be sensible and practical, but farmers think they also should be affordable," Allen said.

The Feds have released an election manifesto in which they emphasise a 'targeted catchment approach'.

"We support a framework for catchment partnerships that co-ordinates community, council and scientific efforts. This could involve a range of taxpayer and region wide rates-based funding to assist in the most cost effective way, to manage our regional waterways," president Dr William Rolleston said.

"This way we can target those hotspots that need immediate attention through applying science-based data, investing resources and funds more wisely, to understand and ultimately alleviate the worst affected areas."

Little said he had a natural "if it ain't broke why try to fix it" attitude to issues and would practise that in government.

Asked by an Otago delegate if a Labour government would continue with the successful policy of the Otago region in relation to water, Little said it was likely to.

"One of the biggest complaints we get is a lack of consistency across the country, but if something is working somewhere, unless there is a very good reason not, you would expect it would work in other places as well," Little said.

"Whatever we do we will work with the farming sector, it's not about us in Wellington telling you what to do."

Farming was driven by the twin pillars of science and sustainability, he said. Labour would re-introduce tax credits for science and innovation, which had been scrapped by the National Government in 2008.

New Zealand sits at the tail end of OECD countries when it comes to R&D spend, at 1.15 per cent of GDP, in the same company as Poland, Turkey, Greece and Hungary. World leader Israel devotes 4.25 per cent of GDP to the sector.

Little singled out soil and water management science as two areas which lacked funding.

Labour's Primary Industries spokesman Damien O'Connor said New Zealand companies needed more R&D investment; at present the major incentives were towards capital investment.

Labour would provide $200 million to a regional economic development fund, part of which would be used to help make unemployed people "ready for work". Some of these would end up working in the rural sector.

"There are 90,000 young people shut out of work and who are being robbed of a future," Little said.

One delegate sought an assurance from Little that the Green Party would not "can" Labour's attitude to how it would operate as a government.

"We [and the Greens] have common areas of policy but also areas we differ on as well. The more support you give us, the more we can approach your industry in a practical and sensible way," Little responded.