A system used to estimate nitrogen loss from farms, and used by regional councils for regulation, has "significant problems", according to the Minister for the Environment David Parker.

The software programme Overseer was initially developed to help farmers make more efficient use of nutrients, with the aim of boosting both productivity and profitability.

But it has steadily been adopted by regional councils to regulate farmers' activity, with the end goal of improving water quality by limiting what ends up in waterways.

A report in 2018 by the Parliamentary Commission for the Environment criticised the tool as flawed, opaque and open to gaming by farmers.

Now an independent Scientific Advisory Panel has backed the original concerns.

Minister for the Environment David Parker says Overseer was originally developed as a fertiliser management tool rather than a nutrient management tool.

"It doesn't properly take into account different soil types, it doesn't deal with overland flows of nitrates - it does it percolating through the soil but if you have a rain event and it washes it off that's not measures - it doesn't balance the total nitrogen and it doesn't take into account the slope of land."

Overseer was probably accurate for dairy farms on flat land and could still be useful for regulation of changing practices on that sort of property, says Parker.

The tool is owned by the Ministry for Primary Industries, the Fertiliser Association of New Zealand, and AgResearch Limited.

Parker says the government would consider whether it is proper to have fertiliser company part-ownership in what has become a regulatory tool.

A few regional councils have embedded the tool rather than the principles of nutrient management in their plans and they will have to look at that, he says.

The government will try to develop a new generation Overseer tool, and it might be used in a more limited way - to identify risk and only on flat land for example.

"We might have to consider some further input controls and we might have to look at what other models there are."

Federated Farmers' water quality spokesperson Chris Allen says farmers had been raising concerns about Overseer for years.

Allen told RNZ that farmers were working incredibly hard to improve practices, but have now been told the tool they use to measure runoff is not good enough.

They want to know exactly what they are supposed to do now.

"Farmers have invested a huge amount of time and money and effort, or altered what they are doing on their land, based on the emphasis the regional councils have put on the use of Overseer,” he says.

"We need an interim pathway.

"We've got compliance issues in regional plans based on whether you meet an Overseer number.

"Farmers want to know are they going to carry on in this fallacy of using this Overseer number and then be rated if they're compliant against it - given the scathing report that's come out."

"This is the thing that's been winding [farmers] up."

- RNZ