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The Government is extending drought relief to a further four regions - Otago, Bay of Plenty, South Taranaki and parts of South Canterbury.
This follows the recent decision to assist drought-stricken farmers in much of the upper North Island.
Minister of Agriculture David Carter said that with significant parts of both islands now in drought, many farmers are heading for a tough winter.
"As soil temperatures fall, rain will come too late for some, forcing the sell-off of capital stock. As a farmer who has weathered difficult droughts, I know how demoralising this is for farmers and rural communities," he said.
"The measures approved today will mobilise local Rural Support Trusts to provide support for farmers coping with financial, social or farm management concerns."
The declaration of a medium-level drought triggers an assistance package that covers farm management advice, welfare support and funding for Rural Support Trusts. In addition Inland Revenue will offer some flexibility within its Income Equalisation Scheme.
Mr Carter says that good planning is critical for farmers heading into winter.
"Experience of previous droughts shows that farmers who have contingency plans in place and make timely decisions are the ones who get through in the best shape."