It has proposed a general rates rise of 73.2 per cent in 2021-22, 15.7 per cent in 2022-23, and 6.8 per cent in 2023-24.
It proposed targeted rates rises of 29.3 per cent, 18.2 per cent, and 14.2 per cent in years one to three respectively, as well.
Federated Farmers South Island regional policy manager Kim Reilly said she came to the hearings "on the heels of listening to harrowing rural mental wellbeing evidence" in the Environment Court on Wednesday.
To speed up what was expected to be a protracted dispute over water in the region, the council's Plan Change 7 was called in by Environment Minister David Parker at the council's request last year.
But the full costs of Plan Change 7 and two other water plan changes due to go before the courts would easily top $5 million for the council and submitters, Reilly said.
The costs for the court's "resource-intensive" process was proposed to be passed back to residents through the rates take, she said.
But no ratepayers "rural or urban" should have to pay the bill.
"It is Federated Farmers' firm view that council's approach to [Plan Change 7] has been a lesson to all other councils across New Zealand of what to never repeat," Reilly said.
"Quick and dirty planning is not better planning, it's a shortcut to a bigger mess, one that ultimately was too eagerly dumped on the court to grapple with and find a way through."
Particularly concerning she said was the fact no senior council staff were present to hear how council actions were affecting farmers' mental wellbeing this week.
It showed that listening to the impact council actions had on farmers was not a priority.
Also, the process "exposed spectacular failings" in the council's processes, she said.
Federated Farmers Otago president Mark Patterson said the council's proposed rates rises were "egregious and unacceptable".
He said "tinkering" with the uniform annual general charge would make a real difference to farmers without having a major dollar impact on urban ratepayers.
More fundamentally he questioned how a council with reserves as large as Otago's could propose adding to residents' rates burden.
Paying rates was becoming unbearable for some farmers and their mental health suffered, he said.
The council might need to consider borrowing to pay for some capital projects to keep rates down, he said.
"These are hard decisions; we are just saying how it washes out on us is unacceptable at this stage," Patterson said.
