A large swathe of the state's west is on the edge of slipping back into drought because of a lack of rain.
The Department of Primary Industries says properties spanning from the Queensland border to Peak Hill north of Parkes are classified as marginal due to deteriorating conditions.
The DPI's Agriculture Protection Officer Simon Oliver says about 16 per cent of New South Wales has not had enough rain.
"Since we've had those two seasons of pretty well above average rainfall we've noticed a big decline in rainfall averages over the past two months," he said.
"So, coming off the back off this winter we'll certainly get to the point where we really need some rain, certainly in the western parts of the state."
The DPI says some farmers have started using their livestock to graze crops because they are not worth harvesting.
Mr Oliver says the rest of New South Wales is satisfactory.
"Most areas of the state are really hanging on," he said.
"There's good sub-soil moisture in a lot of places as a result of the past two good seasons of rain,"
"(We're) certainly noticing a decline in the far-central-west and that north-west of the state where it's started to get fairly warm during the day, up into the 30s, and they've just generally been missing out on rain over the past couple of months."
© ABC 2012
15:46 EDT The Australian research body the Climate Council has argued in its latest paper that the probability of drought will increase, and it will become more severe, because of climate change.