People irrigate a wheat field in Laocheng Township of Changge County, central China's Henan Province, on February 3, 2009. Henan, one of China's key wheat producing regions, has suffered from drought since October 24, 2008. Some 2.9 million hectares of farmland in Henan were affected. [Xinhua]

The Ministry of Finance (MOF) on Friday allocated 86.7 billion yuan (about US$12.69 billion) from its reserve to drought-hit areas in relief funds.

Of the total, 71.6 billion yuan will be given to farmers for buying relief materials, and the other 15.1 billion yuan will go to grain producers to supplement incomes.

The central government announced Thursday it would earmark 300 million yuan for local governments, in addition to 100 million yuan previously allocated.

The MOF ordered local governments to channel the funds to farmers as soon as possible. In the worst drought-stricken provinces, the funds should be given to farmers within one month.

Persistent drought has hit most parts of northern China, including Henan, Shanxi, Shaanxi, Shandong, Qinghai and Gansu, posting a several threat to the country's summer harvest of wheat.

The drought is also affecting rice-growing Hubei, Hunan, Sichuan and Yunan provinces

The area of affected crops has expanded to 161 million mu (10.73 hectares). 4.37 million people and 2.1 million head of livestock are facing drinking water shortages, according to data released by the Office of State Flood Control and Drought Relief Headquarters.

MOA data showed more than 2.3 million mu (153,300 hectares) of wheat seedlings in Henan, Anhui and Shandong provinces had perished.

China declared the highest level of emergency on Thursday in response to the rare drought which began in November.

President Hu Jintao and Premier Wen Jiabao have ordered all-out efforts to combat the severe drought in the country's vast wheat-growing area to ensure a good summer harvest.

On Saturday, the country's economic planner also issued an emergency notification to underscore the importance of drought-relief efforts.

The National Development and Reform Commission (NDRC) urged governments at all levels to speed up construction of water resources projects to meet the demand of agricultural production.

The NDRC has allocated 11.8 billion yuan to rural areas in the fourth quarter last year for local governments to build water facilities and buy water-saving equipment and machinery products, in an effort to ensure water safety and water supply.

More than 4.3 billion yuan was given to eight worst-stricken regions, including Henan, Hebei, Shandong, Anhui and Shanxi.

(Xinhua News Agency February 7, 2009)