RALEIGH, N.C. -- North Carolina's crop economy will lose more than half a billion dollars in 2007 because of a drought labeled the worst in the state's recorded history, according to a state report released Monday.

The preliminary estimates prepared for the state's Department of Agriculture and Consumer Services found that soybean farmers suffered the biggest loss with about $130 million in damages. A total of $382 million in losses will directly hit farms while the remainder will cut into the state's related economic activity.

The numbers did not count losses for the livestock, poultry and dairy industries that have also struggled through the drought.

"These are very, very significant losses," said Agriculture Commissioner Steve Troxler.

Troxler said those severe losses set up the industry for even more trouble next year, and the report said most of the drought's impact will be felt in the future through poor yields and quality. Troxler noted that many farms depleted their water resources, such as ponds and lakes, to supplement their irrigation this past year.

"We're starting with low soil moisture right now," Troxler said. "There has to be adequate soil moisture available to even germinate the crops."

Meanwhile, U.S. Rep. Bob Etheridge said Monday that congressional leaders have agreed to a provision that would open federal agriculture assistance to farmers affected by the drought.

"Without these funds, farmers may not be able to farm next year, creating a ripple effect where rural economies suffer and consumers face higher prices at the grocery store," said Etheridge, a Democrat from Lillington.

Farmers in 85 of North Carolina's 100 counties already are eligible for low-interest emergency loans from the U.S. Department of Agriculture.

About two-thirds of the state is under exceptional drought conditions -- the most intense category reported by the U.S. Drought Monitor. The remainder of the state -- small sections along the Virginia border and much of the coast -- are classified in extreme or severe drought.

Along with crops, the drought has endangered the state's 800,000 cattle because there wasn't enough rain to grow hay this summer. North Carolina farmers lost about $91 million in hay and pasture crop in 2007, according to Monday's report, and some farmers have sold off cattle to avoid rising feed costs over the winter.

Residential water use has also been affected. State officials said local governments have implemented mandatory restrictions on water systems serving 3.7 million people.

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