Primary Industries Minister Nathan Guy says the drought is bigger than that of five years ago, which cost farmers and the economy almost $3 billion.
Mr Guy estimates the cost of the drought in Northland, South Auckland, Waikato, Bay of Plenty, Coromandel, Taupo and Hawke's Bay to be about $1 billion so far.
Manawatu and Rangitikei have asked for an official drought declaration and Canterbury farmers warn they may be next.
Milk production is falling quickly in drought areas, but Mr Guy said it is still too early to know the true economic cost.
ANZ Bank agri-economist Con Williams told Radio New Zealand's Morning Report programme the drought could hit gross domestic product by 0.5% by the end of this year.