The government says 1,000 hectares of land immediately around the Portage Diversion will be eligible for compensation.
Agriculture Minister Ron Kostyshyn (koh-STIH'-shen) says the province used the diversion to manage flood water coming from Saskatchewan to protect homes and properties.
That meant agricultural land was flooded and Kostyshyn says the province will compensate farmers for that.
Torrential rain in both provinces at the beginning of July caused widespread, overland flooding in rural areas in Manitoba and Saskatchewan.
Urban centres were largely left dry.