KEY POINTS:
The Australian Government's key commodity adviser has advocated abandoning thousands of farmers to drought as looming climate change threatens to add even further pressure to the nation's struggling water supplies.
The warning that drought aid is little more than a hugely expensive prop to allow inefficient producers stay
on the land came despite the first relatively rosy predictions for agriculture in nine parched years.
And it will be a hard blow for vast tracts of the continent, where the economic hammer blows of year after year of drought have been matched by serious social disruptions, failing rural businesses, and reports of rising rates of depression and suicide.
Australian Bureau of Agricultural and Resource Economics (Abare) figures suggest that about 24,000 farmers - about one in eight of the nation's producers - are on income support.
But the realities of climate change have been underscored by one of the worst droughts in Australia's recorded history, and by the division between land that has now received rain in the north, and continuing drought in the south.
Climate modelling by the federal science agency CSIRO and the Bureau of Meteorology suggests that climate change could reduce rainfall by up to 10 per cent by 2030 and 20 per cent by 2050.
Further analysis by Abare estimates that climate change could slash wheat, beef, dairy and sugar production by up to 10 per cent by 2030 and 19 per cent by 2050, cutting exports of Australia's major rural commodities by almost 80 per cent within four decades.
"Australia is projected to be one of the most adversely affected developed regions [of the world], given the importance of agriculture in its economy," Prime Minister Kevin Rudd told Abare's annual Outlook forecasting conference in Canberra.
Rudd has already pushed climate change to the top of his Government's agenda.
Immediate prospects have been boosted by recent rain in the north, and estimates that as many as two-thirds of the nation's broadacre farms - large properties producing grains, sheep and cattle - last year managed to stay out of the red.
Forecasts presented to the Outlook conference also predicted that, with the weather beginning to return to normal patterns, high world prices and a bumper winter crop could pump cash back into the big grains industry.
Dairy, cattle and sheep prices are also expected to rise.
And if seasonal conditions return to average, Abare says, the value of 2007-08 farm exports is forecast to soar 18 per cent above earlier predictions of A$27 billion ($31.4 billion) to A$31 billion.
But over the immediate horizon, Australia faces a climate abyss.
The Murray-Darling river system that waters the nation's biggest and most important foodbowl, and keeps alive its biggest cities and the bulk of its population, is already close to exhaustion.
Abare natural resource management branch manager Peter Gooday said further pressure on the system would come from climate change, increasing demand for "environmental water" - needed to keep crucial ecological systems operating - and expanding forestry plantations.
Worse, said CSIRO water expert Tom Hatton, the availability of water was likely to decline across the Murray-Darling basin, increasing conflict between environmental and human, agricultural and industrial needs.
Abare head Phillip Glyde warned that all this, and the prospect of more frequent and severe droughts, meant that governments would be faced with tough and possibly damaging decisions.
Key among these would be the need to decide when to cut the financial umbilical cord. Despite total Government aid of A$3 billion, the lowest-earning 25 per cent of broadacre farmers had not managed to make a profit in any of the past 20 years. Drought aid would condemn them to another quarter-century of penury.