21 Aug 2014

Northland farmers facing ruin

8:31 pm on 21 August 2014

At least 30 farmers in mid-Northland are facing financial ruin in the wake of this year's extreme weather events and falling income, while farmers groups warn banks may be forced to write off millions in bad loans.

"A perfect storm" is how many in the sector are describing the situation in Northland, where droughts last year have been followed devastating floods in July, flash-flooding this week and a drop in the dairy payout.

Hikurangi Swamp is one of the hardest hit areas in Northland.

Hikurangi Swamp was one of the hardest-hit areas in July . Photo: SUPPLIED

Ben Smith, who farms on the Hikurangi Swamp, says this week's flash-flooding could be the tipping point for some, but is really the culmination of five years of extreme weather and burgeoning debt.

"We do know of a number of farmers that are so in debt that, really, it's just about working out a programme to allow them to exit."

Mr Smith says many farmers are working up to 100 hours a week and some have been forced to let staff go, which increases the pressure.

"People get to their tether as what to do when the financial constraints come on, they're trying to do as much as they can themselves."

Flooding on Otiria Road, Moerewa on Friday.

Flooding on Otiria Road in Moerewa. Photo: RNZ / Lois Williams

The Northland president of Farmers of New Zealand, Ian Walker, says his organisation has been working with between 30 and 40 farmers in the Dargaville and Whangarei area who cannot afford to stay on their farms.

Mr Walker says banks are partly to blame for over-enthusiastic lending on the back of the dairy boom times and artificially inflated land prices.

"They did that in the 80s, they did that in the 90s as well, and they had to write off millions. No doubt there's a few banks around Northland at the moment preparing to write off millions at this very minute."

"Bankers come and go within these organisations, and they just make the same mistake every 10 or 12 years. Unfortunately, the banks lose millions of dollars and some farmers lose their shirt."

However, Mr Walker says many farmers who have taken on massive mortgages should have known better. "I've seen some really good long-standing farmers make that mistake and lose the family farm, which is a real shame."

Federated Farmers' Northland president Roger Ludbrook says he hopes banks will work with those farmers in crisis to avoid forced sales.

"If you are one of those farmers with a big debt burden and you're facing this situation which is so extreme in your budget, combine that with potentially a $1 drop in your payout, then maybe there will be some people who because of this event could lose their farm."

A spokesperson for the Northland Rural Support Trust, Julie Jonker, says after the July storms, her organisation received 128 calls from farmers needing help with the clean-up, which represents one in 10 farmers in the region.

"Most of them are going to come out of it stronger, finer. Okay, so they might not be in the same financial position they'd like to be in, but they will adapt. It's the ones that are already at a level where they have little wriggle-room."

Farmers say the next few weeks until the end of September are critical weather-wise - and for many, their future on the farm depends on it.

Flooding in Pipiwai

Photo: Steve MacMillan

Forecasters criticised

The Northland Rural Support Trust criticised the lack of warning ahead of flash flooding in Northland on Tuesday in which many animals died.

Spokesperson Julie Jonker says the forecast was for between 30 and 70 millimetres of rain, but the East Coast actually got 50 millimetres an hour - a one-in-50-year event, and many farmers were caught out.

"We had people having to swim calves to safety because there's a wall of water coming at them and we've got animals that have been killed and washed into mangroves and into trees."

But MetService spokesperson Ramon Oosterkamp says it's not always possible yet to predict exactly how rain will behave and forecasters were taken by surprise.

"The problem we had was the computer models beforehand all have a slightly different story. We put a watch on it, which is sort of a low-level warning if you like, on the event, expecting that there was a possibility of pushing the warning thresholds, which is 100ml in 24 (hours) or a lot more in a very short duration. Unfortunately for a few places, it pushed past that."

Mr Oosterkamp says extreme weather events are increasing, and 50 millimetres an hour may no longer be a one-in-50-year event.

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