And the ripple effects would be felt outside Southland.
Dunedin businesses such as Best Cafe and Harbour Fish sold large numbers of the delicacy and were already bracing for the possible fallout.
The warnings came as calls for action mounted following the detection of the Bonamia ostreae parasite at two Stewart Island oyster farms late last month.
Mr Shadbolt said yesterday there was real concern the Bluff oyster industry was at risk from the parasite, and losing it would be ''absolutely devastating'' for the region.
''A lot of jobs are on the line. It would be a tragedy for Southland if this delicacy [disappeared].
''It's just a real nightmare. It's probably the worst issue we've faced since the threat to close the [aluminium] smelter.''
The marine parasite, which could move through tides and current, was detected in the Marlborough Sounds and Nelson in 2015, but it was the first time it had been found in another part of New Zealand.
It could be fatal to flat oysters, and was believed to spread after oysters died, prompting calls at a public meeting in Bluff on Tuesday for Stewart Island's farmed beds to be pulled up now.
A delegation from Southland also travelled to Wellington yesterday to meet ministers and ministerial officials and discuss the threat.
Ministry for Primary Industries readiness and response director Geoff Gwyn chaired a meeting of the MPI response governance group yesterday.
He could not say what steps would follow or when an announcement could be expected.
MPI had already introduced restrictions on the movement of some shellfish species, farm equipment and vessels to and from affected areas, including Stewart Island, to limit the parasite's spread.
Beyond that, lifting the Stewart Island farmed oyster beds was ''one obvious option'' to protect Bluff's wild oysters,''but there are others'', Mr Gwyn said.
He would not say what other options were being considered, and stressed the need to avoid a ''knee-jerk decision''.
''The reality is we're treating it with urgency, but not with haste.
''Whatever option we take in this space, we are going to impact on people's livelihoods, and that's not something you do without making sure you've actually done due diligence,'' he said.
There ''clearly'' was a risk to the wider industry, but none of the options being considered could eliminate that completely, he said.
''Whatever decision we take will be to minimise the risk, but there's no such thing as a zero-risk option here.''
John Edminstin, an oysterman and chairman of the Bluff Oyster & Food Festival, said the ''best course of action'' would be to lift the Stewart Island beds before the parasite reached Bluff's wild beds.
Not everyone agreed with that idea, but there was little choice - and little time, he said.
''I believe it's the only course of action they can do. You can't move the wild ones, but you can move the ones that are farmed.
''That's about all they can do - and hope like hell they've caught it in time,'' he said.
Mr Shadbolt said he had been told at least 400 workers, and probably more, worked in jobs connected to the oyster industry, and would be affected if the parasite spread.
It would also hurt the region in other ways, as the Bluff oyster was ''an icon, really, in Southland'', he said.
Best Cafe co-owner Brent Charnley said the threat was also ''worrying'' in Dunedin.
''Oysters to us are a big part of our business, for sure, and obviously big for Dunedin. A lot of Dunedin locals, they love the Bluffeys.
''If they're saying it could affect the beds, then obviously that's going to affect a lot of industry, and a lot of people, around the district.''
He was watching developments, as was Harbour Fish owner and manager Aaron Cooper.
''We would be concerned. It's a large chunk of our business and I think it's a great South Island product that people really enjoy, and look forward to that oyster season.
''If we didn't have it, it would be missed.''
