CANBERRA, Australia—A severe drought has gripped an area of Australia more than twice the size of Texas, turning normally fertile crop areas into dust bowls, draining water reserves and leaving wine-producing regions parched. Hungry kangaroos are turning up in cities.

Millions of dollars of farm equipment is idle across vast expanses of agricultural land in the continent’s east, and farmers are wondering if they should bother planting summer crops.

“There’s...