A woman and 3-year-old child have died after a tractor crashed into a reservoir on a rural property in Northern Otago.

The incident occurred around 5pm yesterday on a property in Waihemo, near Dunback-Morrisons Rd.

A police spokesperson said the woman was driving the tractor with a trailer attached and lost control before driving into a reservoir.

Both the woman and child are believed to have drowned as a result of crashing into the reservoir.

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A Dunback woman who did not want to be identified said she knew the woman and her family.

They were "lovely", "really hard workers", and "really nice people", she said.

"It's terrible, it's really terrible."

Police were last night undertaking a scene examination and the Police National Dive Squad has been called to the district to assist in the operation.

The incident occurred in North Otago near Waihemo, around 20 minutes inland from the small town of Palmerston which sits in between Dunedin and Oamaru.

It was the second tragedy to strike the Dunback farming community in the last few months, the woman who knew the family said. Palmerston farmer Craig Porter died on a Dunback property in June, after his ute rolled. The vehicle's other occupant sustained serious injuries.

Fire and Emergency New Zealand and St John were also attending and it is believed two Otago Regional Rescue Helicopters were deployed to the farm.

The rural area is home to sheep and beef farms and stations. New Zealand's largest gold mine, Macraes Mine at Macraes Flat, is nearby.

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In 2014, a 4-year-old girl was fatally injured in a tractor incident on an East Coast farm near Ruatoria.

- Additional reporting: Otago Daily Times