Agriculture Minister Herve Gaymard said the state would provide "around 500 million euros" (550 million dollars) to help cope with the drought, which he told reporters had caused "more than a billion euros" in damage.

Earlier, on Europe 1 radio, he had agreed with estimated from farmers' groups that the persistent hot spell had cost "between one and four billion" to France, Europe's biggest agricultural producer.

He also said that state aid would be limited because of a financial squeeze France was feeling -- a result of tax cuts promised by President Jacques Chirac and an economic contraction in the second quarter of this year.

The country is now in danger of again breaching a three-percent-of-GDP ceiling for its public deficit imposed under the euro zone's rules, for the third year in a row.

The aid promised Friday would come in the form of 20 million euros for direct assistance, a 180-million-euro payment into a long-neglected rural disaster fund, cheap or zero-interest loans, certain tax breaks, and 24 million euros for the transport of desperately needed forage for livestock. The army would also be employed in the last measure.

The package was announced after a meeting between Gaymard, Prime Minister Jean-Pierre Raffarin, and the representatives of major organisations in the agricultural sector.

Jean-Michel Lemetayer of the National Federation of Farmers' Unions, said the measures "went in the right direction, even if we didn't get the 'White Year' we were asking for" -- a reference to a demand for relief from all taxes for 2003.

The more radical Confederation Paysanne -- with anti-globalisation activist Jose Bove as one of its leaders -- slammed the government plan as disappointing.

Spokesman Nicolas Duntze said the disaster fund ought to be funded by an additional tax on the agrifood business, instead of just the government. Large farms would also mainly benefit from the plan, he criticized, rather than small farmers and cattle-breeders who needed urgent government assistance.

Although the drought was in place before the killer heatwave that roasted France the first half of August, the persistent temperatures around 40 degrees Celsius (104 degrees Fahrenheit) during the hot spell greatly worsened the situation for farmers.

Crops wilted, millions of poultry died and livestock farmers had to use forage intended for winter to feed their animals.

In the central Correze region of France, train brought in 400 tonnes of straw from Normandy for farmers desperate at the pitiful state of their herds.

"We have a high number of deaths among the cows, and milk production and the weight of the animals has dropped," a local farmers' union leader, Tony Cornelissen, told AFP.

The emergency delivery was barely sufficient, but provided "breathing space," he said, adding that he had to sell several head to buy the forage.

For French consumers, the financial fall-out of the drought was already being felt, with prices for fruit and vegetables soaring in recent weeks.

Wine, too, was expected to become more expensive, though many makers were predicting a vintage of exceptional quality because, even though the grapes were producing less juice for pressing, the taste was more intense.

TERRA.WIRE