Today, it's being held up as a model for councils across the state.

"It was very awkward in town," Ararat farmer Charlie de Fegely said.

"There was a fight with rural versus urban people that shouldn't have existed.

"It happened because of the way government treated us rather than facing the real problem, which is the inequity between rural and metropolitan.

"It was a terrible time that split the community."

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Those rifts had since been healed, Mr de Fegely said.

"The council we've got there right now is very cohesive and supportive, and we've got rural people working with council to grow businesses in town, as well as in the bush," he said.

Key to the turnaround was a change of personnel, a more consultative approach and the realisation that the shire's different ratepayer groups could achieve more working together.

"I think the new CEO has a lot to be congratulated on what he's achieved," Mr de Fegely said.

That new chief executive was Dr Tim Harrison, who said he took on the role knowing how deeply fractured the Ararat community had become.

"There'd been quite a lot of conflict and quite a lot of heat and pretty negative energy in the community around rating because there was a sense that we couldn't strike a fair model," he said.

After extensive consultation, Ararat ended up settling on a model referred to as The Pie.

The different ratepaying categories, residential, rural, commercial and industrial, contribute a set percentage of the municipality's income.

As property valuations change, the differential amount in the dollar paid is adjusted to ensure that percentage remains consistent.

VFF senior analyst Charles Everist has been presenting the Ararat Shire case study to dozens of municipalities, urging them to take a closer look at how rating systems can be overhauled.

Municipal Association of Victoria president and Pyrenees Shire Council councillor David Clark is a farmer at Glenbrae near Ballarat.

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He said it was vital councils were proactive and considered different rating models.

"The councils that get caught are the councils that stick strongly to, 'This is what we've set the rate at and we don't change it'," Cr Clark said.

"It's important councils think about the community's capacity to pay equally with thinking about where valuations move in setting their budgets and sitting their rates."

The introduction of annual valuations had only exacerbated the situation, Mr Clark said, because shifts in value could be sudden and unpredictable.

Mr Everist said although farmers and municipalities alike were disappointed the state government had done little in response to last year's Victorian Local Government Rating System Review, it was time for councils to step up.

"The blame game from councils needs to end, they have responsibility for their rating decisions, and there are tools that they can use to create a fair system," Mr Everist said.

Even so, the VFF, MAV and the National Farmers Federation would not give up lobbying for reform.

Rural shires were heavily disadvantaged, NFF chief economist Ash Salardini said because they lacked economies of scale when it came to funding infrastructure like roads.

The NFF is developing a proposal for all levels of government to be involved in master plans for regional development precincts, which would allocate funding for the infrastructure that was not reliant on rates or ad-hoc grants.

Mr Salardini rejected any suggestion the proposal meant the city would end up subsidising regional areas.

"People in the city are going to pay less for their food and fibre, if the supply chain infrastructure is efficient and works well," he said.

"Similarly, when we have a big investment in airports or a port in a capital city, we don't say regional people are subsidising the city. It's infrastructure for all because we all export goods, we all import goods.

"You can't play the rural, urban divide sort of card."

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