Consent applications have been lodged by three companies -- Southdown Holdings, Five Rivers, and Williamson Holdings -- which want to set up 16 new farms in the central South Island's Mackenzie Basin.
According to the applications, up to 18,000 cows would be housed in "cubicle stables" 24 hours a day for eight months of the year, and 12 hours a day for the remaining four months.
"This is factory farming, pure and simple," Green Party co-leader Russel Norman 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.
"Once word gets out to overseas consumers that New Zealand butter comes from factory farms, there goes our competitive advantage."
It was a "chilling prospect" from an animal welfare and environmental perspective, Dr Norman said.
He was concerned about the impact of effluent run-off on the Upper Waitaki River and high country lakes such as Tekapo, Pukaki, and Ohau.
Consent applications before Environment Canterbury include effluent ponds with 414 million litres of storage capacity and plans to put as much as 1.7 million litres of diluted effluent onto the land every day.
Agriculture Minister David Carter said he was concerned about the proliferation of dairying in fragile environments.
"They shouldn't be allowed to proceed unless we can be sure they can mitigate any adverse environment effects."
As for animal welfare, Mr Carter said that as long as acceptable standards were adhered to, he didn't think were any issues.
Federated Farmers said "so-called factory farming" cut costs, was environmentally friendly, and would not tarnish New Zealand's reputation.
Public submissions on the applications close on December 18.
