Plans have been ditched for three cubicle dairying operations in the Upper Waitaki, with the companies behind the proposals claiming they have been the victims of misinformation.

Southdown Holdings Ltd (SHL), Williamson Holdings Ltd (WHL) and Five Rivers Ltd (5RL) have withdrawn the effluent applications because of the estimated $2.63 million cost of funding the required ministerial call-in for the project and the open-ended nature of the process. SHL, WHL and 5RL had to pay for all Environment Ministry costs associated with the call-in of the effluent applications.

The ministry's preliminary non-binding estimate of costs was $2.63m, and the applicants' own costs were estimated at a further $500,000.

The applicants had asked for the effluent call-in process to be put on hold until the outcome of water hearings associated with the project were known, but the request was refused.

A statement issued by the three companies last night said they had already spent about $2m removing 1200 hectares of wilding pines and more than $1.8m on hearing costs and regional environmental science analysis.

They were not prepared to fund the costs associated with the call-in that SHL director Richard Peacocke considered premature in the overall process.

"Our silence to the criticism and misinformation in the press to this point was driven by the view that it was inappropriate to have this matter litigated through the media, and in respect of the legal ECan-driven RMA process."

Mr Peacocke said they had always been aware of the environmental fragility of the area and had set about developing a world-class proposal to minimise and mitigate any potential negative environmental effects of dairy farming. Although the stables option had a higher capital cost, there were long-term benefits through improved control and management of effluent, impact on waterways, improved animal welfare and enhanced production.

He said housing cows in stables in New Zealand would increase, but the size of their application might have been two or three years too soon.

"It is apparent that more work on educating the Government and the public on the positive affects of the use of stables to house cows would be beneficial for all.

"The irony of our situation is that stable-style farming is the way of the future if New Zealand is committed to environmentally sustainable farming. Farmers and the environment would benefit during cold wet climatic conditions experienced right throughout New Zealand.

"Providing stables for cows is the most effective environmental and robust animal welfare solution for the region and one that, eventually, traditional dairy farmers will be forced to consider as they come under ever-increasing pressure in the management of effluent by regional councils throughout New Zealand."

The companies said there had been a public misinformation campaign around their plans, including comments claiming the stable approach was damaging to the environment; the 18,000 cows in the project equated to only a 0.2 per cent increase in the New Zealand dairy herd, and the effluent was not equivalent to that produced by Christchurch City as often quoted, but only 6 or 7 per cent of that amount.

The "emotive term of factory farming" was used to create negative images similarly to poorly managed forms of battery hen and piggery operations, when the reality was the planned open-sided, roofed barns provided comfortable, free-range style movement for cows.

Of the 4800 submissions opposing the companies' applications, only 1600 were from individual objectors.