Farmers face being means-tested because of billions of dollars put aside in savings while accepting taxpayer-funded drought relief.
New figures show people on the land have built up $2.8billion in Farm Management Deposits (FMDs) across Australia.
Up to 10,848 NSW farmers hold $594million in the accounts, which are exempt from means testing for drought relief schemes, including interest subsidies.
The Rudd Government is reviewing all assistance to farmers as part of a national review of drought policy amid concerns "less viable or riskier farming operations" are favoured.
Professor Bruce Chapman, from the Australian National University, said FMDs needed to be means tested.
The deposits were designed to give farmers favourable tax breaks to help them build up money in good times for eventual downturns.
"It is important that FMDs are seen as the main mechanism for supporting farmers to manage their cash flow across the climate cycle, so they should be included in the means test for any form of business support offered during downturn," Professor Chapman said in a submission with colleague Dr Linda Botterill to the drought review.
"It is often asserted that farmers should not be required to access FMDs because they are a form of superannuation.
"This is a spurious argument.
"Changes to superannuation in recent years provide all members of the community with a range of choices for the accumulation of retirement savings and these are equally available to farmers.
"FMDs were not set up for this purpose."
NSW Farmers Association president Jock Laurie said the notion that the drought was a potential money maker was fanciful.
NSW Farmers have argued in a submission to the Federal Government's drought review that the FMD system be retained and extended to trusts and companies, as well as lifting the $400,000 cap on deposits.
"I am quite amazed that this suggestion has been made that this is making farmers rich," he said.
"It would be helpful for the National Rural Advisory Council or whoever is making these suggestions to actually identify these people getting rich.
"Then they can tell the rest of us how they are doing it.
"The majority of NSW farmers who have held FMDs have now made withdrawals from their accounts.
"The system works. In good seasons they are invested and then when dry times arrive they are drawn down."
Federal Agriculture Minister Tony Burke said the Government was committed to reforming the drought support system.
Meanwhile, drought conditions have worsened in NSW, with more than 70pc of the state now officially drought-declared.
Figures released by the NSW Department of Primary Industries show just 10.8pc of the state, mostly on the eastern coastline, has had normal rainfall and was rated as "satisfactory" in September.
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