By Bonnie Malkin in Sydney
Last Updated: 11:47AM BST 23 Oct 2008
The group also warned farmers to get used to the lack of rain because dry conditions are expected to continue.
"Words like drought ... have negative connotations for farm families," a report by the Drought Policy Review Expert Social Panel found.
"There needs to be a new national approach to living with dryness, as we prefer to call it, rather than dealing with drought."
The country is currently in the grip of "the big dry" - a drought which has lasted seven years so far and is crippling the farming sector.
The report into the social effects of the drought found it had eroded farming communities and forced families apart. The weather conditions were also a major cause of depression among farmers, it found.
Panel member Lesley Young said the the research revealed the drought did not just affect men.
Women had been forced off farms to earn extra income, and often took the children with them, breaking up families, she said.
Small towns were also suffering, the report found.
Local sporting teams in rural communities had been affected because residents were so depressed that they no longer had the will to join in.
Several small towns no longer had enough people to form a team because "people could no longer justify both the cost and the time away from the farm".
More than 1,000 farmers and their families turned out to talk to the panel about how the drought had affected them.
Panel chairman Peter Kenny said it was obvious that the enduring dryness made life very hard for farming communities.
"We wonder why people have got so much pressure on them out there and they are blowing their brains out and there is a lot of them doing that," he told the Australian newspaper.
"It is clear that drought is having an impact on the wellbeing of farming families and rural communities."
