Drought-stricken Australia may see wheat sales plummet

Australia has been hit by its worst drought of the century.

About 80,000 farms - 60 percent of Australia's total farmland - in New South Wales, Queensland, Victoria, South Australia, Tasmania, and parts of the Northern Territory are badly affected. Only Western Australia has been minimally hit by drought, according to Australia's Bureau of Agricultural Economics.

''We are . . . facing a very grave situation,'' says Minister for Primary Industry Peter Nixon.

One serious result may be curtailment of Australian grain sales abroad. The government and suppliers may be forced to ask foreign wheat customers to take less wheat than they ordered if the harvest drops below 10 million metric tons, says the chairman of the Australian Wheat Board. (Last year's crop was 16 million tons, and some industry sources say a crop of under 10 million tons is possible this year.)

Beef exports are affected, too. Farmers are sending more cattle to market than usual to reduce pressure on pasture and to cut feed bills, and beef sales are at a high. Near Dubbo, a farming community 190 miles northwest of Sydney, newborn lambs also are being slaughtered. Demand for lamb has not been high, however, so the sheep are being slaughtered merely to relieve pressure on pastures.

The federal government is trying to help. It provides financial aid to farmers to meet interest payments in the affected areas and is laying out cash to help pay for water and feed transportation. The aid pays interest above 12 percent on farm loans and provides a 50 percent subsidy for fodder purchases. Both federal and state governments are considering full subsidies for water and fodder transportation.