Drought has hit more than half of the land in the province normally used to grow wheat - about 5 million acres (2 million hectares) - and that number is rising, according to a notice posted Monday on the provincial water bureau's website.
Many areas have seen no precipitation in four months, and 872,263 acres (353,000 hectares) of spring wheat has already dried up or is beginning to fail, it said. More than 240,000 people and 107,000 head of livestock already have lost access to drinking water and are forced to rely on deliveries from fire trucks.
Unusually dry conditions have spread across much of China's northeastern bread basket, including the provinces of Henan, Shanxi, Hebei, Jiangsu and Anhui. The capital Beijing has yet to receive snow this winter, although water supplies have not been affected.
Dry weather and higher-than-average temperatures are forecast well into spring. Scientists say it is a result of the La Nina effect that is also responsible for the harsh winter weather still gripping large parts of China's south.
Premier Wen Jiabao drew attention to the potential drought disaster with a weekend visit to Henan, where he called on local officials to make greater efforts to assist farmers.
Not only do hundreds of millions of Chinese rely on farming to make a living, but good harvests are crucial to keeping meat, grains and vegetables affordable for the vast majority of lower-class Chinese who spend one-third or more of their income on food.
Rising food prices sent the inflation rate to 4.6 percent in December after hitting a 28-month high of 5.1 percent the month before. That put inflation for the full year at 3.3 percent amid blockbuster 10.3 percent economic growth.
Hypersensitive to any signs of potential unrest, the ruling Communist Party is expected to respond by raising interest rates to tame price rises, potentially hitting consumption levels and slowing the global economy in 2012.
In Shandong, the water bureau said the provincial government has allocated $7.5 million for drought relief in 15 cities, though state media reports have said the government has set aside more than $100 million to pay upward of 2 million people to work on drought relief projects.
Bureau spokesmen were not available for comment and there was no way to immediately confirm the higher figure for relief funds reported in state media.