Irrigation from the Opuha dam in South Canterbury will be turned off this evening for the first time in its 17 years of operation as a result of the drought.
Opuha water company chief executive Tony McCormick sent out a notice to the dam's shareholders on Monday confirming they will be shut out of supply.
The lake level is down to 371.7 metres and falling by about 5.5 percent daily and is now down to less than 10 percent of its capacity.
Supply to most of the 250 farms who use the dam is already restricted to half their normally permitted take while more than a quarter of farms were on total bans.
The company that runs the dam said it will stop the water flow for irrigation at 6pm today and it may remain shut off for the rest of the summer season.
Mr McCormick said that the process had begun early this morning.
"We're running through a managed process to shut down the various irrigation schemes that are supplied from the dam.
"One of the objectives is to try and keep the process in the river as smooth as possible, so we actually started at three o'clock this morning.
"We shut down the outflow from the dam a little bit and that's the reduction that's going to occur way down stream, at about four o'clock today, so we're progressively shutting down the flow and then working down the river and shutting off the schemes and individual users as we go.
He explained that the company was extremely disappointed that supply could not be maintained, but that the dam had only 1.5 percent of storage remaining, which was needed to manage the river flow.
"The river has been running at a minimal level for some time now and we're just trying to avoid the situation where we get perhaps a couple of hours of higher flow.
"Amongst other things that could cause a problem with fish habitat: they'll jump into pools that tomorrow might be dry again, so we're just trying to keep things as smooth as we can."
Nicky Hyslop, who is one of the farmers set to lose their remaining irrigation supply today, says the loss of irrigation will have a significant impact on the farm and its income.
She has a 220 hectare sheep, cattle and cropping farm west of Timaru and finishes sheep and beef for the market.
"The implications have been in place to some extent from Christmas onwards, because we've been on severe restrictions, so that's meant we've already made some changes and our stocking rate is certainly lower that what it otherwise would be.
"From today onwards, with absolutely no water, we've certainly had to have a plan B up our sleeves, and we've had to buy in additional feed and just have a plan in place and some trigger point, so that if we do not get rain in the next two weeks then we'll be looking again at our stock numbers and the same thing in another month from here.
"One of the things that will be really important, not only for us but other farms, is winter feed crops and some of those crops are really reliant on getting good rain in the autumn to set them up so we can take stock through the winter."