The Central Plains Water Company and the Canterbury dairy farmer and processor, Synlait, have reached an agreement that will end their legal battle over the use of irrigation water.
A dispute between the two over who should have priority to take water from the Rakaia River had reached the Supreme Court.
But they have settled their differences by agreeing to combine their water consents. Synlait will also increase its shareholding in Central Plains.
CPW has approval to extract water from both the Rakaia and Waimakariri Rivers to irrigate up to 60,000 hectares of farmland.
Synlait has water consents to irrigate about 2500 hectares of land it owns in the Te Pirita area, on the north bank of the Rakaia.
Central Plains chair Pat Morrison says merging their interests will allow both to achieve what they want.
Under the agreement with Synlait, CPW will advance the construction of its scheme in the Te Pirita area, providing irrigation to about 6000 hectares by using water already consented to Synlait.
Pat Morrison says it should be possible to start construction in one or two years.
But that will depend on how long it takes to deal with objections from opponents of the Central Plains Water scheme.
Christchurch City Council, Fish & Game and Ngai Tahu are among those who have lodged appeals with the Environment Court.