1 Dec 2017

Drought risk rises with 'dramatic shortage of rain'

5:52 am on 1 December 2017

The risk of drought is rising as soils saturated after a deluge of rain winter and early spring rapidly dry out.

Cattle on a hill, Hawke's Bay.

The lack of rain is hurting farmers. Photo: RNZI / Johnny Blades

Some sheep farmers have sent lambs to the meatworks early, and the potential for a hot, dry summer could also dent milk supply.

"There's been a dramatic shortage of rainfall to put it bluntly. We're now facing soil moisture deficits on most properties," Canterbury based farm consultant John Ryan said.

The lack of rain where he farms near Lincoln is hurting farmers, Mr Ryan said, as they were not getting the pasture growth they would normally get.

He said some sheep farmers were already taking precautionary steps and sending lambs to the meatworks earlier than usual.

"It's still early enough yet that people aren't panicking. There's nothing like doing your homework and nothing like getting two or three options in line."

The potential for a hot, dry summer could also dent milk supply.

AgriHQ is picking production to be flat this year, though its senior dairy analyst Susan Kilsby said drought may bolster flagging prices.

"If we have a prolonged period of dry and then that actually plays out into less product being available, then you would expect to see some upward swing, particularly in that whole milk powder price."

Given the importance of the agricultural sector to the economy, BNZ senior economist Doug Steel said dry weather could pack a nasty punch.

"All this will flow through to the wider economy through less spending. It may well hit the trade accounts, and put pressure on the currency."

The drought between spring 2007 and autumn 2008 was estimated to cost the economy $2.8 billion, and helped put New Zealand into recession ahead of the global financial crisis.

Mr Steel says it was worth keeping an eye on the skies.

"There is a bit riding on the weather as there always is with New Zealand's agribiz economy, and it's just getting a bit dry. So it's worthy of pointing out the risk."

Mr Steel warns if a severe drought happened the government might have to rethink its spending plans, while the Reserve Bank may leave interest rates on hold at record lows for longer.

On Thursday, Niwa published its outlook for summer, predicting hotter temperatures for the whole country and more rainfall for the top of the North Island.

It also warned depleted soil moisture levels over parts of the country will need to be closely watched.

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