Port Fairy Traders Association president Ken Brookes said the whole region would hurt from the loss of the 2021 international event due to coronavirus restrictions.

"It'll be a devastating blow for the economy of Port Fairy," he said. "There are so many flow on effects from it and it supports a lot of community projects and they will miss it.

"From a psychological point of view, it'll have an effect because so many people get involved, look forward to it and we're so proud of the event.

"Port Fairy obviously needs tourism and the flow on effects from not having them for the event will be felt in restaurants and eateries and their work forces.

The festival committee came to the difficult decision on August 13 to postpone the iconic festival until 2022 amid the coronavirus pandemic and ongoing uncertainty around event regulations.

Port Fairy Show secretary Anita Watts said the folk festival provided an opportunity for the show and many other community groups to raise funds.

"Without Folkie so many things in our community wouldn't happen," she said.

The showgrounds provide camping spaces for festival patrons.

"The postponement is going to impact us quite a bit, it's our biggest fund-raiser for the year," Mrs Watts said.

"We had to cancel this year's show so now we have 18-months to have a look at what we can do.

"We may have to revamp the entertainment at the next show. We have about 14 rides and we might have to reduce that a bit.

"We have such a good reputation and I don't want to tarnish it."

The Port Fairy Show makes between $15,000-$20,000 profit from the folk festival campgrounds. While the money made at the 2020 event will now be injected into the 2021 show, Mrs Watts thinks there will need to be format changes made.

"Hopefully things will be better by 2021 and we can put on a November show," she said.

"We will look at the amount of money it normally costs to put on a show and find a way to still put on a family friendly show.

"We'll get through and we'll have to wait and see how it pans out."

Moyne Shire director of economic development and planning Brett Davis said the council would continue supporting the festival committee steer through the postponement.

"The Port Fairy Folk Festival is one of the most significant cultural events in our region, bringing in well over 10,000 people each year," he said.

"We often hear of visitors not only visiting for the festival but also staying a few days either side of the March long-weekend to explore nearby attractions, with Budj Bim particularly popular in 2019.

"While it is disappointing the festival will not proceed in 2021, council are committed to working with the committee to support the 2022 festival.

"We are also continuing to work with local tourism providers to help mitigate the impacts of COVID-19 on their businesses and provide support where we can."