"It's affecting getting ewes in lamb and that will have an impact on next year's income. You can't just go and sell everything."
He said while many farmers needed to make difficult decisions about their stock there was no easy solution.
Gavin Southey, a Greytown livestock agent, said he had processed about 20 per cent more stock this summer than last year.
He said that if one long-term forecast prediction which forecast that there would be little rain until mid-March was accurate many farmers would be in a desperate situation.
"It's getting to the point where it's starting to get serious. The coastal areas have been hammered like Castlepoint and Riversdale, a lot of them got rid of stock ages ago."
Mr Southey said he had also heard many farmers in the Tinui area faced similar problems.
"I know they've been very dry since about Christmas
"A lot of farmers have finishing lambs that they take up to a suitable weight to kill but a lot are selling before that because they can't afford to feed them.
"The bulk of lambs are heading down the South Island,"Mr Southey said.
Mr Falloon said that he is aware that lamb prices are down as much as $50 a head and this was having a detrimental effect on farmers.
"The price of lambs is uneconomic.
" It's certainly uneconomical for sheep farmers trying to make money. You need to reduce stock to keep your capital stock going"
"You've got your capital stock and if you sell them that's when it does rain, it's a real juggling act, how much feed you've got. You reduce your stock and next year you end up buying them back at really high prices."
The Federated Farmers president said the challenge for farmers is trying to avoid selling their stock before they are primed which is a very hard position to be in.
"If you sell for a low price it comes straight off your bottom line," he said.
Farmer Chris Engel said water restrictions in the Waiohine River, which came in to force recently were adversely affecting him.
"We've got restrictions on the river so a lot of people who take water from there will be affected. When you're relying on water and it's not there you have to wind down, cull your stock and look after the young ones"
Mr Engel, a dairy farmer, said after the first cull farmers were scanning their cows to ascertain if they were in calf or not and a lot of farmers were getting rid of any cows that weren't. They were also looking at once-a-day milking.
