"This threshold would be reached when lack of rain has an economic, environmental and social impact on farming and the wider community."
Many in the agriculture sector are already facing irrigation restrictions as water levels drop. Farmers are de-stocking and using feed supplies, others have already dried off milking herds, and there are fears yields could be down 50 per cent.
In south Canterbury, the Opuha Lake has only enough water to support irrigation for about another month, and other schemes are operating on 50 per cent restrictions.
Mr Guy spoke to farmers during a visit to a farm owned by Federated Farmers board member Chris Allen.
Rural communities should be aware support was available through Government agencies, including Inland Revenue.
"I would urge farmers to make use of the good advice and support available from their local Rural Support Trusts. They are doing a great job of co-ordinating farming communities and providing information," Mr Guy said.
"Unfortunately droughts are nothing new for farmers. Two summers ago we suffered through the worst drought in 70 years, and last year we had severe dry spells in parts of Northland and Waikato.
"It is a tough situation for many with this coming on top of a lower dairy payout. However, I know that farmers are resilient and have come through many challenges like snowstorms, earthquakes and commodity price fluctuations before."
Federated Farmers national president William Rolleston said Canterbury farmers were used to dealing with long, hot summers, but this year the "big dry" had hit much earlier and irrigation schemes couldn't keep pace.
Meanwhile, ANZ Bank announced assistance for farmers affected by extreme dry.
"The 'big dry' is affecting areas which haven't experienced extreme conditions like these for many years, so for a lot of farmers this is new territory," the bank's commercial and agricultural managing director, Graham Turley, said.
"We recognise the challenges and anxiety this is creating for farmers, which have been exacerbated by forecast low dairy payouts. We're offering targeted assistance, recognising the situation may require more complex solutions for some." additional reporting Ashburton Guardian