The entire North Island, parts of the South Island and the Chatham Islands have been declared as being in drought by Agriculture Minister Damien O'Connor.
O'Connor said the large-scale adverse event declaration, announced this morning, would unlock up to $2 million of funding to help farmers and growers from now until June 2021.
Medium-scale drought declarations had already been announced in Northland, Auckland and Waikato, Gisborne, Manawatū, Rangitīkei, and Tararua - but this new classification covers the entire North Island along with Tasman, Marlborough, Kaikōura, North Canterbury and the Chathams.
O'Connor said the intensity of the dry conditions had spread and despite recent rain across some parts of the country, many rural people remained under pressure with water shortages and low feed availability.
The new funding would help boost co-ordination efforts and activate some additional recovery measures, including for animal welfare and wider rural communities, he said.
"With several requests for regional declarations of drought received in the past few weeks, it's become clear that many farmers and growers in the North Island and parts of the South Island are facing very difficult dry conditions," O'Connor said.
Tailored packages would be developed to suit each region's needs and a feed working group would also be established, he said.
For those areas already facing a medium-scale event, there would be funding for additional drought co-ordinators if needed, as well as access to recovery advice for affected primary sector businesses, he said.
"Funding for psychosocial support in affected regions will also be boosted, and we'll be working closely with farmers to help ensure the welfare of animals in their care."
'We haven't seen dry conditions like this since the early 1900s'
O'Connor told Morning Report this was a large-scale event.
"It requires coordination across government agencies and requires a bit more funding."
He said it was very dry, and places had "severe moisture deficit" in the soil.
"Now as we move into Autumn, soil temperatures will drop ... that lower temperature, no moisture means there simply won't be grass there for the animals," he said.
"People who lose their jobs as a result of this are able to go to MSD. This $2m package is not direct payment but support for farmers at the frontline dealing with very long periods of dry conditions."
He said the drought would lead to the reduction in economic activity in rural New Zealand.
"We haven't seen dry conditions like this since the early 1900s we're told. It is very significant, but we have new technology, new farm practice, better information, so most farmers are in a better position to handle this."
He estimated it would take about 18 months to get through it.
Tapawera sheep and beef farmer Kerry Irvine in Nelson said it had been a tough season.
Although it rained last night about 10ml to 15ml in the region, he told Morning Report they had only had 12ml of rain since Boxing Day.
"You can throw as much money to farmers and we will be thankful, but ultimately we just need rain," he said.
"We really rely on getting a good winter crop in and just getting that bulk feed. That is a real concern. We just hope we have a nice few couple months before the winter frost starts kicking in.
"We'll get through it but there might be a few stock having to be sold ... no one wants that."
About receiving psychosocial support, Irvine said it wasn't the first time farmers were in a tough situation, and it wouldn't be the last.
"We're pretty strong people. Ultimately everyone's got their breaking point."
'It's starting to bite'
Rural Support National Council chair Neil Bateup said the fund meant the government was recognising the severity of the situation.
"It's quite intense now," he told Morning Report.
"Droughts are common in the six to eight-week period, but this one has gone a lot longer than that ... in some parts of the country, probably three months. It's starting to bite."
Comparing with the last large drought in 2013, he said this one started earlier and he couldn't say when it would be over.
He said the money would help put in coordinators in areas if required.
"It will free up some money for technical support and advice for farmers in very dire situations."
In some cases, it would help to put food on the table for those with no income at all, he said.
"Farmers love their animals and they don't like to see them go hungry. They'll be concerned about that more than anything else."