By Christian Mahne in New South Wales

Every week there is some new measure of the terrible toll Australia's drought is taking on the economy.

Forecasts for agricultural production have been cut and cut again.

Emergency funds for areas with "exceptional circumstances" are becoming the norm.

But it is not just farmers who are feeling the pinch.

The "big dry" as it is known, is desiccating the entire rural economy.

Advertising slump

Gunnedah, five hours drive north west of Sydney, is right in the heart of the drought belt.

Radio advertising has been hit

As the sun bakes the parched land, the local radio station avoids weather forecasts. Nobody wants false hope.

In towns such as Gunnedah the radio station is at the heart of the community. The DJs try to keep up morale as best they can, but the battle is getting tougher.

Money is harder and harder to come by, and with nobody spending, advertising at the station has slumped, according to manager Peter Rasmussen.

"The Australian standard is 18 minutes of commercials an hour - we normally run about 18 minutes. At the moment we're probably running about nine, so it's 50%.

"We have to fill windows so we're supporting local business by boosting the number of spots where we can."

Money worries

Mr Rasmussen is watching his costs.

Turning out the lights when leaving the studio and training the staff to be multi-skilled will get the station through the tough times. Other businesses won't be so lucky.

The best thing you can do is to give them a world class competitive economy, which we have done Prime Minister John Howard

Anne Simms from the local chamber of commerce says the money worries are shared by everybody.

"I think the mood is one of a bunkering down mentality. You pull in your belt and look after costs.

"Maybe you won't do that bit of advertising, maybe you won't get in that amount of stock - you're not sure whether you can sell it."

The car dealership in a nearby town is a typical example. They would normally sell five or six cars a week but last week they sold one.

Promise of help

The cries of rural businesses have been heard in Canberra.

Prime Minister John Howard and his deputy have flown in to Gunnedah to witness the effects of the drought first hand.

Two years ago there were floods

Their visit ends with the promise of more emergency funding, but making it through the drought is still going to be expensive.

The Prime Minister told the BBC the government was already helping drought-stricken communities.

"The best thing you can do is to give them a world class competitive economy, which we have done.

"Interest rates are dramatically lower than what they were 10-15 years ago and that means that when it does rain, and people go into a bit of debt to rebuild, they won't have to pay ferociously high interest rates".

But that strong economy is hard to find in the parched countryside.

Waiting for rain

Rocketing prices for hay and grain have led farmers to feed their cattle by hand so that nothing goes to waste.

And for those in the drought belt there is a bitter irony: two years ago the farms in this area were submerged by floods, now the land is bone dry.

In fact, there has been no significant rain at all since those floods of 2000, forcing the farmers to deal with one extreme of nature then the other.

Until the drought breaks, they have no option but to wait and watch what they spend.