Federated Farmers has abandoned its bid to appeal Transpower's plan to build pylons across Waikato farmland to Auckland.
"While the federation's counsel believes there are strong grounds for an appeal, in the end, the project would go ahead whether we did so or not," the group's electricity spokesman Philip York said.
"We will instead continue to advocate that Transpower make ongoing compensation payments to affected landowners on top of the proposed one-off payments."
The Transpower upgrade involves 185km of 70 metre-high pylons running a 400kv line from Whakamaru in south Waikato to the southern limits of Auckland.
The federation has asked the New Zealand Institute of Economic Research to look at costs of introducing a rental system for the pylons.
A majority of the affected landowners had already accepted Transpower's offer of a one-off compensation payment, Mr York said.
"Landowners who have not yet accepted the deal are holding out for an improved compensation package, which would include ongoing payments when the productive use of land is lost.
"These landowners can rest assured the federation will continue to push for an improvement to the current deal. They deserve ongoing compensation in order to offset the income that may be lost in the long term."
Transpower chief executive Patrick Strange has said ground work for the pylons would begin this summer, with contractors doing earthworks and foundations.
The pylons would not start to go up until December 2010, along with the transmission lines.