Irrigation NZ believe Labour's water tax proposal needs to go back to the drawing board.
They've carried out a survey of 124 farmers from around the country on how they'd be affected by the tax.
Irrigation NZ CEO Andrew Curtis said 27 percent of farmers say they would have to reduce staff hours or start laying staff off to meet tax costs.
Some farmers simply won't be able to afford it, he said.
"For the typical farmer it's another $20,000 a year that they would have to pay, and that would have a real serious impact upon their bottom line [and] on their cash flow," he said.
"They exist on a fairly tight margin as it is."
Mr Curtis said over 80 percent of farmers are already carrying out environmental improvement work, but half would have to stop to be able to afford the tax.
He added that if cleaner rivers are what is wanted, that comes from enabling community conversation.
"It's now happening in Canterbury, Hawkes Bay and numerous other places. It's the best model, it's a successful model - let's just dump the tax and run with getting the local community option."