A large Maori dairy operation in Taranaki is heading for a financial hit due to the worsening drought conditions.
Taranaki, along with other regions in the North Island, is seeking Government recognition to be designated an official drought zone.
Chief executive of the Parininihi ki Waitotara Incorporation [PKW], Dion Tuuta, says favourable weather conditions at the end of last year fooled it into thinking the incorporation would boost its dairy production in the 2012/13 season, but the continuous dry spell is putting that at risk.
He says the lack of rain means that, realistically, the incorporation will make a profit of just over $2.6 million, which he describes as "a fantastic result" given the circumstances and says still represents its highest-ever production.
But Mr Tuuta says, because of the dry conditions, that equates to a loss of 400,000 kilograms of milk solids, which represents a loss of income of around $1.5 million.
He says PKW is doing what it can to mitigate that loss by using reserve silage and is helped by the fact it has a diverse farming portfolio, which includes crayfish, forestry and commercial property investments.
PKW Farms Limited is Fonterra's largest Taranaki milk supplier.