The situation has prompted many farmers to de-stock their properties, and they are spending every spare dollar on winter feed to keep the remaining stock alive over the cold season.
Federated Farmers North Otago president Otto Dogterom said life was "pretty bleak" at present.
He said he was one of the lucky ones, because he had irrigation on his farm, but many others — particularly sheep farmers — did not.
The dry conditions meant winter feed crops had not grown well, and grass growth for hay or silage had also been severely impacted.
"For mainly sheep farmers, it’s been a horrible year — with high on-farm costs, high interest rates, low stock prices, non-favourable ground conditions and low productivity.
"Buying in extra winter feed is very expensive.
"We’re definitely under pressure from the banks. They say they are accommodating, but ..."
The ground conditions in North Otago have been severe enough for the Ministry of Primary Industries to classify it as a medium-scale adverse event.
National Institute of Water and Atmospheric Research (Niwa) forecaster Ben Noll said the situation was unlikely to improve in the coming months.
"What we’ve heard from the farmers is that it’s really dry there.
"There’s definitely been a lack of precipitation and soil moisture in the area."
While there had been some rainfall in the past couple of weeks, it was nowhere near enough to break the conditions, he said.
"Over the last 15 days, North Otago has had no more than 50% of what they would typically expect over a two-week period at this time of year.
"They’re in a pretty substantial deficit so far this month and I don’t think the rain they’ve had recently has made a significant or serious dent in alleviating some of those deficits.
"The soil moisture is anywhere between 30mm-50mm below normal for this time of year.
"You’re probably talking two or three really soaking rainfalls needed, to actually make a difference, and nothing like that is even on the short-to-medium term horizon."
Mr Noll said the latest weather outlook showed there would be below-average rainfall this month through until the end of July as a whole.
"So the wetness you would normally expect at this time of year is either going to be delayed, or missing in action, for significant periods of time."
If the soils did not get enough rain to be recharged ahead of next spring and summer, it would have even longer-term implications.
"It’s a compounding effect of multiple dry seasons in a row, where things can escalate to a level that can become quite challenging.
"People on the ground there should be angling themselves for dealing with dry for some time to come, and thinking about what they might do if winter does turn out to be quite dry.
"I would say it’s going to be a long and dusty road ahead."
Mr Dogterom said farmers in the area were showing great strength by holding on and continuing under such challenging circumstances.
"Basically, we’re getting through by prioritising every dollar and making it count in the short and medium term, and hoping that things will improve in the future.
"This is farming — it is what it is.
"We go through times like this and all we have is hope that we come out the other side and recover."
