Federated Farmers national president Katie Milne says councils need new ways to diversify their funding and the reliance on rating is "abhorrent" and needs addressing.
In her report to the rural lobby organisation's national conference, Ms Milne said that would be particularly helpful for councils with a small rating base.
Central government must also make sure councils were reasonable in how they rated "and not bleed the public for projects which may never get off the ground or pet ideas that only serve the ideologies of the few rather than the many".
"There is a belief we are all rich farmers but this is just a myth," she said.
Consumer behaviour was changing, so farmers' ability to be adaptable and resilient was needed now more than ever, Ms Milne said.