The federal government will pour $300 million into new dams and other water infrastructure as part of its farm sector competitiveness package to be released on Saturday.
Adding to the $200 million recently announced for dams in northern Australia, the new money will create a $500 million National Water Infrastructure Fund to enhance future water security for farmers.
The entire package will be valued at $4 billion, but $2.5 billion of that money will be reserved for repayable drought-assistance loans over the coming decade.
The fund will be announced by Prime Minister Tony Abbott and Agriculture Minister Barnaby Joyce when they release the long-delayed agriculture white paper at a dairy farm in Warrnambool, southern Victoria.
They will also announce the creation of an agriculture commissioner to operate out of the Australian Competition and Consumer Commission whose responsibilities will include monitoring the many market disputes between agricultural suppliers and the dominant supermarket chains, Woolworths and Coles.
Mr Abbott is expected to say a "more farm-savvy and proactive ACCC" will encourage fair trading and strengthen competition. The initiative will cost $11 million to create the new position.
Overall, the white paper provides $740 million in new money for agricultural programs over the four-year forward estimates.
A further $14 million will provide a two-year pilot program to encourage the creation of farm cooperatives, collective bargaining and alternative business models.
The most recent commodities data from the Australian Bureau of Agricultural and Resource Economics predicts national farm production to top $54 billion in the 2015-16 financial year.
National Farmer's Federation President Brent Finlay told Fairfax Media that figure could double to more than $100 billion by 2030 given the right support for the sector as Asian export markets grow.
A range of tax-friendly measures to be announced in the white paper are expected to be among the most popular with individual farmers, according to expert sources.
Farmers will be able to reduce their tax liability in profitable years by steering more money into "Farm Management Deposits", a federally managed scheme designed to smooth out the bumpy income stream of farms.
The limit on deposits will be doubled to $800,000 from July 1, 2016.
In times of drought, farmers will be able to access deposits without losing tax concessions
An agreement has been reached with banks to allow farmers to use funds in FMD accounts as collateral to reduce interest costs on business loans. My Joyce estimates this will save $150 million a year.
There will also be immediate tax deductions for investing in new water infrastructure and fencing, as well as accelerated three-year depreciation of capital expenditure on fodder assets.
Mr Abbott said: "We are lowering tax, cutting red and green tape, building infrastructure, encouraging trade, developing northern Australia, and supporting business to innovate and create jobs."
Another $100 million will be spent on research and development for profitable initiatives and $100 million to eradicate feral pests, disease and weeds.
