Prime Minister Tony Abbott says a $320m drought aid package for farmers is a hand-up, not a hand-out, but admits it is also a short-term solution.

Hundreds of farmers are expected to access a package which includes income support, cheaper and more-easily accessible loans, water management, pest control schemes and mental health services.

Mr Abbott has vowed the government will look at long term policy once a white paper on agriculture is completed this year and defended the package after the government knocked back support for hard-pressed businesses such as SPC Ardmona and Holden.

“A farmer in trouble is in a very difficult situation and a rather different situation to most of us when we are in trouble,” he said.

“If your farm is in dire drought, you can’t sell, you can’t borrow, you can’t leave, but you’ve got no money.”

The prime minister is confident the wider public supports farmers in times of need.

Under the scheme, farming families without an income but holding farm assets of up to $2.5 million will be able to access support payments from March 3 under the new plan.

Drought concessional loans totalling $280 million will go to potentially hundreds of farm businesses struggling to pay off debt.

The loans of up to $1 million, or 50 per cent of a farm business debt, will only go to farm businesses deemed viable, while NSW and Queensland farmers will also have access to a $12 million fund for emergency water infrastructure and $10 million will go to tackling weeds and pest animals such as wild dogs.

A further $10.7 million will go to social and mental health services to deal with the family and personal stress of drought.

More than 70 per cent of Queensland and half of NSW is in drought, with the weather bureau forecasting a dry autumn.

Prime Minister Tony Abbott and Agriculture Minister Barnaby Joyce announce drought aid. Photo: AAP

Farmers welcome aid

Meanwhile farmers have expressed their gratitude but also warned the government there’s more work ahead on longer-term reform to address future droughts.

Wayne Newton from Walgett in New South Wales says the package isn’t going to solve problems in a hurry but it made people on the land feel like someone cares.

“I think that’s a big, big plus,” Mr Newton told AAP.

“When you’re going through hardship, you’re looking out there for some sort of support, whether it’s mental or physical.”

Bourke grazier Phil Ridge said farmers and communities would have liked more but the package was sufficient to address immediate issues.

He spoke with Prime Minister Tony Abbott, who visited Mr Ridge’s property on his recent listening tour, about the need for “big picture” drought policy.

“It’s a three-way conversation that needs to happen between the banks and government and farmers, because no-one’s really getting ahead enough,” he told AAP.

The National Farmers Federation (NFF) said the package included many of the measures it was seeking, except wage assistance and professional advice.

The next step was to work on drought policy reform, focused on preparedness and recovery support.

“The long-term policy void is not good for farmers, the government or the broader community,” NFF president Brent Finlay said.

The federal opposition has backed the package but sought more details on loan eligibility criteria and how many farmers stood to benefit.

NSW farmers also welcomed the drought package and concessional loans designed to ease the load on mounting farm debts.

“The more generous criteria for accessing income support sounds encouraging but we are yet to see the details,” said Sarah Thompson, chair of NSW Farmers Rural Affairs Committee.

“We are seeking farm assets to be excluded as was the case under exceptional circumstances.

“These assets determine the future income-generating capacity of a farm and will assist farmers recover from drought.”

Bob Katter goes on the attack

Meanwhile maverick north Queensland independent and former National Party MP Bob Katter has attacked the aid scheme, using social media to condemn it as “the death warrant of agriculture” and arguing the amount of money provided for loans was insufficient and that interest rates on loans would be too steep.

Gov #drought package signs death warrant of agriculture w 70% QLD suffering @ mercy of drought of biblical proportion pic.twitter.com/YeQCNToswV

— Hon Bob Katter MP (@RealBobKatter) February 26, 2014

Additional reporting: AAP and David Sexton