Pace Farm chief executive Paul Pace says the business will probably be forced out of Canberra when its lease expires if the new suburb goes ahead, with the loss of 65 primary production jobs.

He described the proposed clear zone of 750 metres around the Parkwood Egg farm as completely inadequate.

But the company's claims were rejected on Friday by the Land Development Agency, whose deputy chief executive, Ben Ponton, said there would be no smell for residents outside the 750-metre buffer and when development began inside the buffer the egg farm lease would be cancelled.

Planning Minister Mick Gentleman has approved a territory plan change to pave the way for the housing development, which will have 11,500 homes, spilling over the border into NSW. The development has sparked concerns about the impact on the adjacent Ginninderra Falls area.

Mr Gentleman approved the Territory Plan variation without referring it to the ACT Parliament's planning committee, a decision described as disappointing by Liberal planning spokesman Alistair Coe.

"What is the purpose of having a planning committee if it is not to consider massive housing estates?" Mr Coe said.

Pace Farm commissioned a report from Katestone Environmental, which concluded the government's report had significantly underestimated the odour emissions from the egg farm – and could be out by a factor of more than seven.

A clearance zone of between three and four kilometres was necessary to meet NSW odour guidelines and reduce the impact on residents to an acceptable level, Pace Farm said.

In NSW, a developer would be required to carry out high-level modelling, especially when the plan was to rezone land "to permit some 30,000 people to reside in the vicinity of the largest poultry farm in the region", it said.

Pace has seven sheds with 189,000 chickens, but permission for as many as 10 sheds, housing 270,000 chickens.

The Katestone report said the government-commissioned odour report had assumed an odour emission rate of 4 OU ("odour units") per minute per bird, but that significantly underestimated the emissions from layer chicken farms, which could be up to 7.6 times higher.

And while the government report had used a Victorian guideline of 7 OU in the absence of a Canberra limit, it would have been more logical to use the NSW limit of 2 OU.

Whichever limit was used, both were exceeded at distances greater than 750 metres from the Parkwood farm in all directions except the north to north-east, Katestone said. To meet the NSW odour figure, the buffer should be three to four kilometres from the farm. To meet the Victorian figure, the buffer should be 2.5 to three kilometres.

Mr Pace said Pace had recently switched from cage to barn eggs at the ACT farm, which also housed one of the company's three grading and packing centres nationwide. The Parkwood lease runs for another 18 years and Mr Pace said he had expected the business to remain on site for as many as 50 years, but his discussions with the government suggested the lease was highly unlikely to be renewed because the farm was incompatible with residential development.

Mr Ponton confirmed that Parkwood's lease would not be renewed at the end of 18 years, and might be resumed earlier if the housing development went more quickly than anticipated. Parkwood was "absolutely" aware of that.

"Parkwood Eggs know and has done for some time that the land is required for development in the next 20 years," Mr Ponton said. "They know what the rules of engagement are."

The government rejected Parkwood's analysis, he said. The current Crown lease specified an exclusion zone of just 500 metres. The government-commissioned report had recommended 600 metres. And the decision to impose a 750-metre zone had been based on best-practice South Australian guidelines.

Pace's concerns were set out in a submission to the Territory Plan change, but the government said an independent site auditor had endorsed the approach, it said.

Riverview plans to sell the first property off the plan in June 2016, with residents living in the new suburb in the third quarter of 2017.