Drought relief extended – despite recent rains

Primary Industries Minister Nathan Guy was supposed to hold a woolshed drought meeting at Richard Murchison's Weka Pass station late last month, but ironically the recent rain made it too muddy for people to access the woolshed.

Around 40 North Canterbury farmers and community representatives sat smiling in the sun, amongst hills with a decidedly green tinge for the first time in almost two years as they attended the drought update meeting.

Guy, on his third drought visit in the last ten months, announced an extension to the drought declaration until the end of June, an extra $150,000 in funding for the Rural Support Trusts and continuation of rural assistance payments and IRD measures.

The minister and attendees were then briefed by locals, many of them able for the first time to put a cost on the drought.

James Hoban, the North Canterbury drought response committee co-ordinator, spoke about data provided to him from two Cheviot area farmers. One had worked out that the drought had so far cost him $672,000 in extra expenses and lost production for his 4500 stock unit farm. Another figured $242,000 in extra expenses so far, but he hadn't yet factored in lost production. The message was clear from both farmers that the financial effects of the drought would be felt for years to come.

Host Richard Murchison told the story of the drought on his 707ha station. The hill country farm, lying 190-430m above sea level, has had less than half its average rainfall since the start of the drought.

Murchison said they were fortunate to have had good baleage crops in 2014, helping them weather the early part of the drought. Keeping an eye out he spotted a neighbour with a paddock of good feed and rang him, saying if you don't ask you'll never know, and he was rewarded with the ability to graze 1000 ewes on it for six weeks which gave him some breathing space.

Murchison said they were able to maintain ewe numbers but at a big cost. "The pastures are buggered, everything has been hammered," he added. Whilst not needing fertiliser in 2015 as sulphur levels had held up, the situation now meant that fertiliser was needed and could no longer be deferred.

Deferred maintenance on the Murchison farm could no longer be avoided and they would be refinancing a bit to get them through, but the rain was extremely welcome.

Representing the banks, Chris Kelliher, branch manager for Rabobank's rural team, said he had been banking for over 20 years and this drought is the most difficult he's dealt with.

Data from Kelliher said the average debt level for drought-affected farms is $500 per stock unit. They had worked out the average cost of the drought at $400,000 per farm and the average debt level for drought farms was around $1.2 million. Bankers were expecting negative EBIT's this year.

Kelliher said farmers were working with banks, they were rationalising, non-core assets were being sold, baches were being sold and non-farm investments were being capitalised in order to avoid incurring debt.

With the average North Canterbury farm carrying about 60% of normal stock capacity, Kelliher is concerned about what farmers are going to replace stock with because there isn't the replacement stock available.

However, it wasn't all negative from the banks. He said the low interest rates were extremely helpful, wool prices were looking good and Kelliher brought laughter to the crowd when he suggested that sheep prices surely must get better.

Hurunui District Council mayor Winton Dalley, on behalf of the district's farmers, thanked the Government for their support during the past 16 months. He also thanked the banks for holding their nerve and being prepared to work with farmers. Special praise was given to the North Canterbury Rural Support Trust and vets.

But Dalley said there would be three major costs ahead for farmers – pasture renewal, restocking and coping with lost earnings.

Guy said Canterbury farmers were resourceful and not looking for handouts, indicated by the low uptake of employment benefits, but they wanted to know that the Government knew what hardships they were going through.

With the nearby Masons Flat weather station indicating there has been only 238ml of rainfall in the last 12 months – closest to the lowest ever recorded rainfall in New Zealand at Alexandra in 1964 of 212mls – Guy was concerned that even though there is a bit of green about there is still a long way to go to lift soil moisture levels.

With NZ only collecting and storing about 2% of its water, Guy said Hurunui is crying out for a decent water storage project and he later got a private briefing from organisers of the Hurunui water project scheme.

The cost to the country, Guy predicted, would be 0.5-1% of GDP, but he said farmers will get through this and the Government will support them.