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Drought Forces Australian Farmers to Face Financial Ruin

Farmers in Australia are facing financial ruin as they struggle to cope with the worst drought in a decade. Parts of New South Wales and Queensland have not seen rain in two-years, and economists are predicting that the fall in farm incomes could shave one-percent from Australia's economic growth this year.

Much of Australia's farming heartland has been reduced to a dustbowl. Two-years of drought have devastated the lives of farmers and outback communities across the country, with some areas experiencing their lowest rainfall since record-keeping began in 1900.

The President of the New South Wales Farmers Association, Mal Peters, says life on the land is getting tougher. "We have got a critical situation among a lot of farmers in New South Wales, with a lot of people who run livestock. They are now running out of water, with not only surface water, but bore [well] water now getting into critical situations," he says. "They have no feed left in their paddocks."

The drought is the latest example of wild weather here in eastern Australia. There has been snow in summertime, hailstones the size of bowling balls, a tropical cyclone, and a severe round of brush fires. Forecasters say parts of New South Wales may not see significant rainfall for another year.

Like many other farmers, Tom Kennedy has lost this year's wheat crop, so parched is the land. "Yes, this has been prepared ready for cropping this year, but there was not any moisture, so it is just stationary now. We would need at least four-inches of steady rain to put moisture back down," he says. "The ground is opening up now, she is all cracking, so she is dry down to at least a meter."

Water for the family's needs has to be brought in from a neighboring property. Tom's wife, Ro Kennedy, is philosophical, and says battling the elements is part of a farmer's life. "You have to get through things and it is no good complaining or whining. You just do it. It will rain one day, but in between times you know that times will be tough, but that is it," she says.

The latest estimates put nationwide drought-related job losses at more than 20,000. It is not just rural areas that are in the line of fire. With economic activity in farming communities grinding to a halt, the effect is flowing through to cities in the form of job cuts and skyrocketing food prices - just in time for Christmas.

In a normal year, grain trains from eastern Australia would be lining up to dump their cargo in Melbourne, in the South, for processing. But the drought is so serious that many urban workers have already lost their jobs.

Marinus Van Onselen is the chief executive of a large freight company, who says job losses will affect the entire economy. "Whether you are a loco driver in country Victoria or a mechanic in the city here, the jobs are now in jeopardy and that includes issues in this office here, for example," he says. "I mean, we have a number of people who will be leaving the organization and that is a tremendous loss of expertise and a loss of skill. It is really a disastrous issue."

The Australian government has promised $150 million in drought relief to farming communities. The New South Wales state government is offering handouts, too, for farmers to pay for water or to move cattle. For many it is not enough, but State Premier Bob Carr believes it will make a difference. "We are not dwelling on whether it is easier for farmers than it was in the mid '90s. The mid '90s - it was catastrophic. This is, by any test, a serious drought condition and we want to help and everything we're doing is crafted to assist farmers," he says.

Australia's national anthem describes a land "of droughts and flooding plains" but even in a country used to extremes, the length of this dry spell is causing many farming communities unusual pain.