In the regions such as northern Pernambuco state and southern Alagoas, the cane growers reported that lack of rains resulted in loss of more than 40% of the crops.

The financial help is expected to facilitate fuel makers to re-grow the cane crops required for the fuel production. Funds will be allotted to nearly 45 mills based on the amount of ethanol they sold in the previous harvest season of 2012.

Speaking in an interview, Brazil Ministry of Agriculture, Livestock and Food Supply’s sugar cane and agroenergy department director Cid Jorge Caldas was quoted by Bloomberg as saying that the companies could claim 20 centavos for every liter of fuel they sold in the local market during the 2011-2012 harvest season.

The government intervened so as to prevent shortfall of fuel supply of ethanol in the region, said Caldas adding that the recent drought was the severe than the country has faced over last three years.

Brazil had formulated the subsidies earlier in May 2013 and a notice published in the nation’s official gazette approved disbursement of the funds.