The drought has reached the northern coastal strip of NSW.
Some farmers are hand-feeding their dairy cows and seeing a fall in milk production, while irrigation water is being restricted.
Steve Germon's dairy farm is at Dollys Flat near Wingham in the Manning Valley.
He's started selling heifers to buy feed, but the cost of lucerne hay has almost doubled to $500 a tonne.
"If we go two months without water or significant rainfall, we'll have to look at culling severely or selling all of our heifers off farm," he said.
"We're in the process of selling some Friesian heifers off at the moment to try and reclaim some extra income to buy some more feed if we can get it.
"(There's a) lack of feed, nowhere we can buy reserve feed now, because it's just gone through the roof.
"As we've found out through a neighbour today the price of feed has gone up dramatically, and what's left around is very scarce.
He says milk production has dropped back by a third.
"I can't see in the foreseeable future any reserve stocks coming out to us," he said.
"At the moment our cows are just holding, they'll hold as long as I've got a bit of feed in reserve, which at the moment I'm feeding a silage bale out everyday," he said.
There's enough silage to last another 24 days.
"Everybody in this industry the way it's been for the last three years would be stressed to the max," he said.
"I think it's just the day to day dealing with watching the cows go backwards, and not being able to have that time with your family because there's a lot of feed out time.
"It does create a lot of stress on families, yes it tries you out."
Rain has started falling on the farm this morning and there's 18 millimetres recorded in the gauge so far.
But he says if it doesn't continue his irrigation water will be cut in a few weeks.
"As it is now we've been put on a regime of being able to put water on from Tuesday through to Sunday, and we're battling pretty well," he said.
"Without rain, it looks like we will go into the hardest winter on record the way things are shaping up."
© ABC 2014
17:34 EST The weather bureau's long-term forecast is predicting a drier than normal October to December for much of eastern Australia and north-west Western Australia.