Drought latest threat to economy
By Owen Hembry, NZ Herlad, Wednesday Jan 07, 2009
The ailing NZ economy could be made worse by an agricultural industry affected by drought. Photo / Hawke's Bay Today
The risk of a drought compounding the nation's economic woes is growing as the summer heats up, farmers say.
Economists say droughts last summer were the trigger that tipped the country into recession but they have yet to factor the weather into their already gloomy forecasts for the year ahead.
Federated Farmers' adverse events spokesman, Frank Brenmuhl, said yesterday that rain last month had helped relieve the immediate risk of drought in parts of the east coast of the North Island.
"However, existing soil moisture deficits and high daily temperatures in Gisborne-Wairoa and the Hawkes Bay mean that by late January, conditions could be of concern to Federated Farmers," Brenmuhl said.
"The ground conditions in some parts of the east coast resemble concrete. Without a decent fall of rain these two provinces will come under intense pressure around late January."
Federated Farmers said it would keep an eye on conditions with the Ministry of Agriculture and Forestry, and would meet soon if sustained rain did not fall during the next few weeks.
"Slow steady rain over a week and upwards of 100 millimetres is needed to soak deep into the soil in order to turn this picture around," Brenmuhl said.
Niwa principal scientist Jim Salinger said an updated outlook for the January to March period would be released this week.
There was a lack of soil moisture in the east of both islands and Central Otago and Dunedin, with patches of severe deficit in Gisborne, Hawkes Bay, North Canterbury and Central Otago, Salinger said.
"Certainly [in] areas like Gisborne, Hawkes Bay and Central Otago you do expect that sort of thing but the areas where it's unusually dry at the moment are in parts of Gisborne, southern Hawkes Bay and inland Southland to South Otago."
Severe soil moisture deficit meant there was no moisture in the soil for plant growth.
The country was not seeing last year's weather pattern when western areas of the North Island in particular started to dry out dramatically, Salinger said.
Westpac economist Doug Steel said that at this point there was not expected to be a nationwide dent in agriculture production.
"[There is] a little bit of a contrast to last year where the dryness was quite widespread, this time around, at least so far, it seems like those areas that are a little bit dry that there is other areas where you can move your stock to," Steel said. "It is being factored in but it's not a negative."
Pastoral agriculture was a key part of the economy and widespread dry weather such as last year's had a pretty big impact on national gross domestic product (GDP), he said.
The Ministry of Agriculture and Forestry estimated the cost of last summer's drought to the dairy industry was $1.4 billion.
"I think the drought [last year] was a key reason why we were in recession in the first half of 2008," Steel said.
ANZ economist Steve Edwards said some regions were experiencing dry conditions but it was not yet a situation in which to push the panic button.
"It is sort of a seasonal thing that does happen and they can change around quite quickly," Edwards said.
"If it gets to the extreme that's when we start to factor in drought conditions and we're not looking at that yet."
* Federated Farmers said a hailstorm with stones the size of golfballs that swept across North Canterbury on Saturday caused damage estimated to be well in excess of $1 million.
North Canterbury Federated Farmers grain and seed chairman Paul Stackhouse said he knew of one farmer who incurred $250,000 of crop damage.
"A number of rape seed crops were also badly affected by the hailstones," Stackhouse said.
"This includes one farmer who saw some 40 hectares of crops literally stripped bare."
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