Moira Shire has failed to secure $1 million in federal government drought funding after falling short of the threshold for assistance by the narrowest of margins.
A council had to have 17 per cent of the community employed in agriculture to be eligible.
But a Senate Estimates hearing on Monday was told Moira had 16.9 per cent.
The revelation comes as neighbouring local government area, Federation confirms today how it will carve up the $1 million in drought funding after its request for support was confirmed in late July.
Moira Shire chief executive Mark Henderson confirmed there had been a large drop in those working in the dairy sector due, ironically, to drought and present farm viability.
Also, horticulture involves seasonal work which often misses Australian Bureau of Statistics data capture used to confirm the threshold level of those working in agriculture.
The 16.9 per cent figure doesn't capture the council area's high level of agricultural service employment and food processing from companies such as Saputo.
"From our perspective the frustration is felt by our farmers who genuinely need support," Mr Henderson said.
"The fact that Moira includes some larger towns like Yarrawonga that are not large agriculture employers skews the numbers and leaves our rural communities wondering why we miss out when their neighbours in the next shire don't."
The drought package is designed to support communities experiencing hardship in drought affected areas by providing $1 million to eligible councils to complete infrastructure and other drought-related projects.
Moira mayor Libro Mustica, who farms land in addition to being a developer-builder, was devastated by the decision.
"I was very disappointed that with 0.1 per cent we won't get drought finance when there's so much need for it," he said.
"We've had two years of lost crops and I can't remember the last time we got more than five millimetres of rain."
The council had hoped to use the money for rates relief for farmers and to fix roads.