The Ministry of Primary Industries (MPI) is rejecting accusations that it is incompetent when it comes to animal welfare issues.
Farm monitoring group Farmwatch has published footage of a contract milker beating cows, at times with a metal pipe.
The group said MPI should be stripped of its animal welfare responsibilities because it did nothing when told of the abuse, and that this was not the only time MPI had failed to act.
MPI is now investigating the farm, but its manager of compliance investigations Gary Orr said Farmwatch may have compromised the probe by releasing the video.
Yesterday Farmwatch said it put hidden cameras in the milking shed because a farm worker, who had witnessed the abuse and complained about it to MPI, was told it could not prosecute without video footage and the case was being closed.
Mr Orr told Morning Report Farmwatch had been given MPI the video footage last Thursday and yesterday the farm was searched, animals inspected and a person interviewed.
He said MPI was not legally allowed to install hidden cameras.
The law only allowed that kind of surveillance was if an offence being investigated was punishable by more than seven years in prison, he said.
"The maximum penalty for an offence under the Animal Welfare Act is only five years so legally we can't do this," Mr Orr said.
He said it was his understanding that when the whistleblowers first approached MPI they wanted to remain anonymous and were not prepared go before the court.
"And in the absence of somebody who's prepared to stand up in court, and physical evidence, then it is really difficult to achieve that standard of proof which is the criminal standard."
The farm would be continued to be closely monitored by MPI animal welfare inspectors, Mr Orr said.
And he said he was at a loss why Farmwatch would have concerns about MPI.
"I think people can have real confidence that we will take action where there is evidence to support it, and the number of successful prosecutions we've had bear testament to that."
MPI makes dozens of prosecutions a year, he said.
Want to surveil farmers? Ask for a law change says SAFE
An animal welfare group said MPI needed to speak up for a law change to enable them to secretly film animal abuse.
Hans Kriek is a spokesperson for SAFE, which worked with Farmwatch on the investigation.
He told Morning Report that if the law was preventing MPI from putting up surveillance cameras why weren't they calling for a law change themselves?
"Because what they did now is when they were told by credible sources that these animals were beaten badly ... they just walked away and let the farmer continue for another year.
"And that's not acceptable."
He said MPI was reluctant to take up cases of animal cruelty because it has a conflict of interest, with its main job being to promote agriculture in New Zealand.
Dairy NZ - which represents dairy farmers - told Checkpoint with John Campbell yesterday the footage was disturbing.
It said cruel and illegal practices were not condoned or accepted in the industry.
Dairy co-operative Fonterra said only farmers who met strict animal welfare standards were allowed to supply it with milk.