Farmers should be given tax breaks to build reservoirs on their land as part of efforts to tackle drought, the Government has been urged. National Farmers\' Union president Peter Kendall said it was \"crazy\" that tax allowances which provided a financial incentive for farmers to build reservoirs had been phased out by the previous government. He warned that drought would push up food prices if crop yields were affected, and called for tax breaks for reservoirs, which would make farmers less reliant on taking water from rivers and supplies needed by other users. His comments came after the South East was officially declared to be in a drought, following parts of eastern England which has been suffering from drought since last summer. Environment Secretary Caroline Spelman said drought-afflicted areas need 120% of the normal rainfall up to the end of March, but heavy rainfall is not forecast, making impacts for agriculture and hosepipe bans for householders more likely. She said more water storage, including on farms, would help make the most of what rainfall the UK receives, warning the last two dry winters could become the norm as the climate changes. She also said genetically modified crops, for example drought resistant varieties, could be \"one of the tools in the toolkit\" in dealing with food security in the face of water scarcity - an issue which she said must rise up the international agenda. Speaking at the National Farmers\' Union annual conference, Mr Kendall told Mrs Spelman: \"We all agree that water storage in water-stressed areas is a no-brainer - just look at the current drought situation. \"But in terms of policy signals that match your and Defra\'s call, what\'s coming out from the Treasury on farm reservoirs is woeful. Businesses used to be eligible for tax relief if they built reservoirs. They no longer are. What kind of message does that really send to a vegetable producer who\'s got to reduce his summer abstraction?\" Mrs Spelman said she had signalled to the Treasury the importance of on-farm water supplies and that the Government\'s water White Paper encouraged the use of reservoirs on farms. She said extreme measures to tackle water scarcity, such as desalination plants to get freshwater from the sea, were expensive and energy intensive.