In this article a new approach to one aspect of the economics of drought reserves will be discussed. In particular attention will be directed to the uncertainty of drought feed requirements. If future feed requirements were known with certainty then drought would lose many of its terrors, adequate reserves could be accumulated In time to meet a dry spell and unnecessary reserves could be dispensed with. The main worries associated with drought are the uncertainty as to when a drought will begin and how long it will last. Essentially in this article the aim will be to develop one new approach to the problems of risk and uncertainty raised by drought. The example used could have been more detailed and more realistic (for instance, the possibility of selling sheep, or buying grain and lucerne hay, rather than wheaten hay, could have been considered). Similarly, the problems of fodder deterioration and possible income tax effects have been ignored. This extra detail has not been included, because though it might have made the article more realistic for some readers, particular assumptions would have made it less realistic for others. In any case there would have been a tendency for the main principles of the argument to be lost in a mass of special assumptions.