Farmers in South Canterbury are pushing to be able to take water from Lake Tekapo, with extremely dry conditions forecast to continue.
They rely on the Opuha Dam which is only a quarter full and falling fast.
Federated Farmers President Dr William Rolleston said access to alpine water like farmers have further south in North Otago would make a huge difference.
He said taking water from Lake Tekapo was a very viable option.
"Surprisingly enough, Lake Tekapo is actually higher than Burkes Pass, so you can feasibly bring water over Burkes Pass and down into the Fairlie Basin to water much of South Canterbury," he said.
"That would also help to supplement the Opuha Dam. So it is feasible to do that."
Dr Rolleston said resource consent to bring water from Lake Tekapo over Burkes Pass was granted but was given up when the Opuha Dam was built.
Minister for Primary Industries Nathan Guy, who met with about 20 farmers in South Canterbury today, said the government saw big upsides in more irrigation for regional economic development.
Mr Guy said the government had set up a Crown irrigation company to kickstart regional water projects.
"They're already working closely with Central Plains, which is a massive irrigation scheme not too far from Christchurch. We're talking a $400 million dollar investment there in total."
However, Mr Guy would not comment on the Lake Tekapo option, saying he did not know the issue well enough yet.
Mr Guy said Canterbury farmers have reduced stock numbers and made sure they have enough feed.
But he said the dry conditions were early this year; normally coming in February and March.
Mr Guy said NIWA's soil moisture monitoring showed North Otago, Canterbury, Marlborough and Wairarapa were very dry but farmers have not yet sought drought assistance.
Dr Rolleston said farmers have become a bit wary about declaring a drought.
He said having a drought declared did bring advantages in terms of some assistance from the government, banks and the tax department.
But he said there were disadvantages too.
"As soon as there's a drought declared, we get a lot of feedback from the urban community saying that farmers are just getting handouts," he said.
"There seems to be an impression that we're getting a whole lot of subsidised money flowing into farmers' pockets and it's just not the case."
Dr Rolleston said farmers were very nervous about that type of publicity.