A road collapse caused by floodwaters in north-east Victoria has cut a regional road in two.

Gooramadda Road, just outside Rutherglen, has been closed for the past two weeks after a large chunk of the road washed away.

Olive grove owner Melanie Coid said locals had dubbed it the "Gooramadda gorge" after it appeared on November 14.

"In the morning there was water on the road and by the evening the road had totally collapsed," Ms Coid said.

"There was a six-metre wide and two-metre deep ravine.

"The locals can still access the road, it's still safe, but the road is cut, so you can't drive the road in its entirety.

"It's exceptionally impressive. You can see all the different colours in the soil levels."

Indigo Shire Council said in a statement the road would remain closed until repairs could be made.

"At this stage we cannot give a time frame until we have appointed a contractor and have received their construction schedule," a spokesperson said.

"We will replace the culvert with larger infrastructure that has increased capacity to manage significant rainfall events.

"We believe that the culvert has become blocked, causing a damming effect on the inlet side. This had led to the embankment becoming saturated and causing it to fail at the culvert location."

There are currently concrete barriers in place to prevent vehicles passing and pedestrian fencing to stop people getting close to the site.

Indigo Shire Council encouraged heavy vehicle drivers to follow road closure signs to avoid having to turn a B-double truck around at the cut-off point.

'We are still open'

Ms Coid said her business had one week of trading since the sinkhole appeared and visitor numbers were significantly down, with only a handful of people turning up.

"We're heading into Christmas and this is usually a busy time of year for us and the other wineries and businesses on Gooramadda Road," she said.

"We're missing that passing tourist trade, and I want everyone to know that we are still open.

"But you've got to stay positive, we all know each other along the road so last weekend we had a street party at the gorge.

"We took our chairs, some nibbles and a few ales and caught up.

"There's even some talk about decorating the barriers with Christmas decorations and there may be a Christmas party at the gorge."