France, the EU's top wheat producer, has formed a national "drought committee," limiting water consumption in many regions and lifting curbs on the use of fallow land for grazing.
The European Commission last month approved France's request for an advance on the Common Agricultural Policy (CAP) payments its farmers are due to receive in December, bringing them forward to 16 October.
France's support to farmers would also include exemptions from land tax worth about 300 million euros and 200 million euros in compensation from an agriculture disaster fund, President Nicolas Sarkozy said during a visit to a drought-hit part of western France yesterday.
The authorities would also offer farmers a one-year postponement on the repayment of loans contracted during a previous government aid plan, he said, adding the cost of this measure had yet to be calculated.
Prime Minister François Fillon, speaking to parliament later yesterday, estimated the total cost of the support for farmers at "close to one billion euros".
The March-May period was the driest in France in 50 years and the hottest since 1900, and cattle breeders already struggling with low meat prices have seen supplies of grass and other fodder dwindle, leading some to reduce their herds by selling more livestock to abattoirs.
"The thrust of what we're going to do is to give you some room for manoeuvre in terms of liquidity and to put back loan repayments by one year," Sarkozy said during a visit to a farm.
Rain has returned to dry farm belts in western and northern France since last week but the spring drought is already expected to have slashed yields of crops in the European Union's top grain producer and exporter.
More than half of France's administrative departments are currently subject to restrictions on water use, with this year's drought exacerbating declining water-table levels in some areas.
Grain areas in Western Europe under strain
Drought has also struck other major grain areas in Western Europe, including northern Germany and southern England, although rain has been plentiful in Spain, which typically has a much drier climate.
Across England and Wales as a whole it has been the driest spring since 1990.
UK Environment Secretary Caroline Spelman is set to hold a second drought summit to review the impacts of the continuing dry weather.
She said: "Water companies are confident that supplies are high enough so that widespread restrictions to the public are unlikely. We're doing all we can to reduce the impact on agriculture and wildlife, but everyone can play their part."
"Households know how to use less water and everyone can do their bit to use water more wisely, not only through the summer, but throughout the year."
EurActiv with Reuters