As the dry threatens to lift costs and cut production, processors will also set up a dairy industry drought task force to help farmers get access to government funding.

The Dairy Farmers Milk Co-operative has announced it will spend nearly $8 million to help farmer members.

And Ross Greenaway from Murray Goulburn says additional water is an integral part of their package.

"People that are buying temporary water on the market we're about to announce that we will be extending that interest free finance from the beginning of October," he said.

Source: abc.net.au