Nearly 220 counties in a dozen drought-stricken states were added Wednesday to the U.S. government’s list of natural disaster areas as the nation’s agriculture chief unveiled new help for frustrated, cash-strapped farmers and ranchers grappling with extreme dryness and heat.

The U.S. Department of Agriculture’s addition of the 218 counties means that more than half of all U.S. counties – 1,584 in 32 states – have been designated primary disaster areas this growing season, the vast majority of them mired in a drought that’s considered the worst in decades.

Counties in Arkansas, Georgia, Iowa, Illinois, Indiana, Kansas, Mississippi, Nebraska, Oklahoma, South Dakota, Tennessee and Wyoming were included in Wednesday’s announcement. The USDA uses the weekly U.S. Drought Monitor to help decide which counties to deem disaster areas, which makes farmers and ranchers eligible for federal aid, including low-interest emergency loans.

To help ease the burden on the nation’s farms, Agriculture Secretary Tom Vilsack on Thursday opened up 3.8 million acres of conservation land for ranchers to use for haying and grazing. Under that conservation program, farmers have been paid to take land out of production to ward against erosion and create wildlife habitat.

“The assistance announced today will help U.S. livestock producers dealing with climbing feed prices, critical shortages of hay and deteriorating pasturelands,” Vilsack said.

Vilsack also said crop insurers have agreed to provide farmers facing cash-flow issues a penalty-free, 30-day grace period on premiums in 2012.

As of this week, nearly half of the nation’s corn crop was rated poor to very poor, according to the USDA’s National Agricultural Statistics Service. About 37 percent of the U.S. soybeans were lumped into that category, while nearly three-quarters of U.S. cattle acreage is in drought-affected areas, the survey showed.

The potential financial fallout in the nation’s midsection appears to be intensifying. The latest weekly Mid-America Business Conditions Index, released Wednesday, showed that the ongoing drought and global economic turmoil is hurting business in nine Midwest and Plains states, boosting worries about the prospect of another recession, according to the report.

Creighton University economist Ernie Goss, who oversees the index, said the drought will hurt farm income while the strengthening dollar hinders exports, meaning two of the most important positive factors in the region’s economy are being undermined.

The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Thursday’s expansion of federal relief was welcomed in rain-starved states like Illinois, where the USDA’s addition of 66 counties leaves just four of the state’s 102 counties – Cook, DuPage, Kane and Will, all in the Chicago area – without the natural disaster classification.

The Illinois State Water Survey said the state has averaged just 12.6 inches from January to June 2012, the sixth-driest first half of a year on record. Compounding matters is that Illinois has seen above-normal temperatures each month, with the statewide average of 52.8 degrees over the first six months logged as the warmest on record.

“While harvest has yet to begin, we already see that the drought has caused considerable crop damage,” Illinois Gov. Pat Quinn said. In his state, 71 percent of the corn crop and 56 percent of soybean acreage is considered poor or very poor.

In South Dakota, where roughly three-fifths of the state is in severe or extreme drought, Vilsack earlier had allowed emergency haying and grazing on about 500,000 conservation acres, but not on the roughly 445,000 acres designated as wetlands.

Vilsack’s decision to open up some wetland acres in a number of states will give farmers and ranchers a chance to get good quality forage for livestock, federal lawmakers said.

“The USDA cannot make it rain, but it can apply flexibility to the conservation practices,” Sen. Tim Johnson, a South Dakota Democrat, said Wednesday. The USDA designated 39 of his state’s counties disaster areas.