PdAlbury

[AAP]

NSW Primary Industries Minister Ian Macdonald

Subsidies for drought-stricken NSW farmers have prevented widespread livestock culling and there are no plans to scrap the scheme, the state government says.

The Productivity Commission has criticised the federal and state governments’ process of declaring areas drought affected and then providing financial assistance.

It says the funding is propping up unprofitable farms and those engaging in “worst practice”.

It also found the lowest performing quarter of the nation’s broadacre farms hadn’t recorded a profit for 19 years, well before the current drought.

The commission has called on the federal government to scrap its “exceptional circumstances funding” and for the NSW government to end its subsidies for transport of fodder, water and livestock in drought affected areas.

But NSW Primary Industries Minister Ian Macdonald is standing by the state scheme, saying it prevents the mass slaughter of livestock which has characterised previous droughts.

“This has not occurred in the recent drought. In the mid 90s there was a falling off of the slaughtering and in this drought almost a total absence of it,” he said.

“We think that’s a great win for animal welfare in this state and also for farmers in terms of being able to keep some of their core breeding stock.

“When you do get a break in the drought it’s not good having empty paddocks.”

Mr Macdonald criticised the Productivity Commission report for its “narrow focus”, saying many regions in the state were dependent on keeping family farms afloat.

Opposition primary industries spokesman Duncan Gay also attacked the report, saying it was written by someone “sipping coffee” in green parts of Canberra with no idea of the real problems facing farmers.

The NSW government has committed to reviewing drought subsidies once the current six-year drought has passed, and Mr Macdonald said there would be some changes.

“We’ve already flagged a debate on how we better target our funding to assist drought affected farms,” he said.

“But all of us are careful about changing it midstream during this current drought.”

The latest drought figures released on Thursday show 60 per cent of NSW is now drought affected, a slight increase from the 59.6 per cent recorded in April.

The marginal area has fallen to eight per cent, from 9.1 per cent last month, meaning 32 per cent of the state is now classified as “satisfactory”.