Drought help for Australian farmers

CANBERRA - Australia's farmers, battling the worst drought in a century, received an extra A$250 million ($269.71 million) in government support on Monday as residents in the nation's biggest city braced for tougher water restrictions.

After three years of low rainfall in some of the nation's farming districts, Prime Minister John Howard announced increased interest-rate subsidies and extra income support to stop farmers walking away from their properties.

"People who would otherwise be efficient, profitable farmers, are being beaten down by this terrible drought," Howard told reporters.

Howard toured drought-stricken areas on May 20 and saw dusty paddocks, dried up dams and starving sheep and cattle. He talked to farmers to see how they were coping with the dry conditions.

Water levels are also at new lows in the major cities, with the main dams supplying water for about four million people in the biggest city, Sydney, below 40 per cent capacity after the warmest and driest autumn on record.

Sydney's Warragamba Dam, which supplies about 80 per cent of the city's fresh water, is only 36 per cent full and residents have endured tough restrictions on water use since June 2004 as water supplies dwindle.

Householders have been banned from using sprinklers and automated watering systems on their gardens, while people are banned from hosing down their cars or driveways.

The New South Wales state government has flagged even tougher restrictions that will allow only hand watering in gardens two days a week, and hefty fines for water wasting.

In rural areas, farms covering almost half of Australia's agricultural land are receiving drought assistance, with the state of New South Wales the worst affected with farms covering 92 per cent of the state's agricultural lands receiving help.

Howard said the latest drought assistance took the government contribution to farmers for the current drought to A$1.25 billion. He said it was crucial for the government to help farmers who could ride out the drought, to stop them joining a rural exodus, as commodity and rural property prices remained reasonably strong.

"This is particularly directed at keeping people on their properties," Howard said.

"They have left the land in droves over the past 20 years, and I think a lot of marginal farmers have already gone." Australia's peak farmers' organisation the National Farmers' Federation said the extra money would help viable farmers hold onto their businesses, but said it was disappointed the government did not announce new cash grants to farmers.

- REUTERS