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ARMATREE, Australia - While Australians near the coast delight in a winter that is warmer than average, those in the outback reeling from drought fervently hope for rain as dams dry up and crops lie barren under a relentless sun.

Gripped in the iron clasp of drought is two-thirds of the large agricultural state of New South Wales (NSW) - an area about the size of Greece. Another 17 percent is in partial drought. Times are turning desperate for those who work the land in one of the world's top food exporting nations, as the drought is expected to be aggravated by the El Nino weather phenomenon that the Australian Bureau of Meteorology said last week is forming.

In Armatree, a small rural town about 300 km (190 miles) from the east coast, farmers like Jenny and Craig Bradley spent a lot of money preparing for a lack of rainfall.

They sowed and fertilised all the paddocks on their sheep and cattle property, then checked all livestock to sort out those carrying offspring, and sold off the rest. They rationed feed scrupulously. All to no avail.

"All the money has been spent up front, and now it looks like we may not get a return on any of it," Jenny Bradley said.

BLEACHED LANDS

The dry winter air has transformed once green countryside into bleached yellow scrub. Roads wind through flat brown fields.

It has been two years since substantial rain has fallen in Armatree. Dams in the area have long since dried up, leaving farmers to rely on water from borewells. Not all have that.

Drought is part of life here. A year ago farmers were rejoicing in the best prices for decades for beef and wool. Now they are struggling again.

"Of all the times to run into a drought, when mutton, wheat and beef prices were so good, it's just a shame," said Bradley.

"With high commodity prices and the way things were going, a lot of people took the plunge and bought more land. They'll be finding it difficult (to cope now) with the debt," she said.

The drought is no longer just a threat hanging over farmers. It is painfully tangible after the planting window closed with only about 70 percent of crops in the ground.

The Australian Bureau of Agricultural and Resource Economics (ABARE) recently cut its national wheat crop forecast to 20.5 million tonnes from original estimates of almost 24 million tonnes. Some traders speak of 15 million tonnes.

The New South Wales government has come up with an assistance package for 1,100 farms, but the aid is not enough.

The Bradleys have been hand-feeding their livestock for most of this year from stocks of grain built up when the spectre of drought first surfaced.

"We haven't had to buy in any feed because that's a drought management lesson we learnt from (the) 1994 (drought). We've actually stored more grain than we've ever stored before," Bradley said.

But only two months of supplies are left.

Their cattle, presently grazing for a fee on more fortunate farms with surplus feed, will return in two weeks, just in time for calving. More mouths will need to be fed.

CLOUDLESS SKIES

It leaves the Bradleys scanning cloudless skies in the hope of rain. If none is received in the next two weeks, a crop of oats that managed to scrape through the dry soil will turn to waste.

Ten km (six miles) down the road, cattleman David Tym was droving around 150 cattle along the thin strips of grassy land next to the highway.

"Up in Coonamble they've closed (stock routes) because there's no feed on them and there's no water. It's a pretty desperate situation," Tym said.

Drought means disaster across society for remote Australian farming communities. Money runs out as waterholes dry up.

"People just tighten up, they don't spend the money because they haven't got it," Bradley said. "You don't know how long the drought is going to last so you save your cash reserves and you just spend it on the items you need."

"The best we can do is learn...and prepare for the next one," she added.: