Currently, 99 per cent of the state has been declared in drought or drought-affected and the lack of rain has led to crippling conditions for many primary producers.

NSW Premier Gladys Berejiklian visited the Kelly family farm on Monday to announce the funding package and said it would focus on a number of key areas.

During her visit she described conditions as unforgiving and dire.

The three major elements of the package include: transport subsidies; cutting fees and charges for farmers including a waiver of Local Land Service rates; and a boost to the Farm Innovation Fund infrastructure program.

Freight subsidies will be backdated to January 1 this year.

Funds will also be available for: counselling and mental health; critical services including transporting water and drought-related road upgrades and repairs; animal welfare and stock disposal.

“This has been an unforgivingly dry winter, we knew as a government we had to do more,” Ms Berejiklian said.

“Conditions have not relented, conditions are getting worse. If there’s more we need to do, we will.”

Grazier Andrew Kelly runs merino sheep and cattle on his family’s farm and said many producers across the state were doing it very tough.

“There’s plenty of farming businesses out there that are in some dire need of some help at the moment,” he said.

“We’re in an unprecedented time at the moment and the stats don’t lie. I looked at plenty of weather stations all over NSW in the last few days and we’re below our fifth percentile in median rainfall for the last 12 months so that makes things pretty tough.”

Rural Aid founder Charles Alder praised the funding announcement.

“We need to acknowledge that the drought assistance the NSW Government has put out today is a great step and it will provide some relief for farmers in terms of their ability to claim back to the first of January, but  but also claim $20,000 worth of freight subsidy,” he said.

Mr Alder said it was a “significant gift from the NSW Government” that interest had been waived on the Drought Innovation fund loans.