Chile has strict protocols about non-veterinary staff carrying out euthanasia, and authorities are investigating the matter.
But Mr Keeley said there was no such requirement in New Zealand, and many people would stop eating meat or drinking milk if they knew what happened on farms.
"There is no law about killing an animal as long as it's done quickly and humanely - that could include whacking them on the head with a hammer," he said.
"It used to be common practice here, but I haven't heard of it going on for years."
Mr Keeley said the majority of unwanted calves were shot.
Federated Farmers dairy chairman, and Mid Canterbury corporate dairy farmer Willy Leferink said the images portrayed by media were "not a good look".
"There are some issues in Chile because they are not used to seasonal milking and all these calves arriving at once, but it's difficult to deal with, those pictures are not pretty."
The problem in Chile was compounded by a lack of slaughterhouses, where the bulk of Mid Canterbury's four-day old bobby calves end up.
"In general we like to have farmers adhere to proper processes - and those processes in Chile are even stricter than they are here.
In New Zealand calves are usually disposed of with a .22 rifle or a dead bolt humane killer but strict regulations around firearms in Chile might contribute to the problem, Mr Leferink said.