THE Southland drought is already hitting businesses in the pocket and dairy and produce prices are both expected to rise.
Evansdale Gardens general manager Nathan Piggott said water his workers normally used for plants (sourced from a well and rain-water collection) ran out about two weeks ago.
Since then the business had had to buy more than 160,000 litres of water.
“As an unbudgeted expense, this will have an impact, and if the expense is ongoing we will take a significant hit.”
Revenue Minister Stuart Nash confirmed on January 18 that tax relief measures would be extended to farmers in drought areas.
E arlier this week the minister of agriculture and rural communities Damien O’Connor included Southland in the regions officially recognised as having a “medium-scale adverse event” as a result of drought.
Westpac bank’s head of commercial and agribusiness Mark Steed, who was encouraging Southland farmers to speak to their bank if they were undergoing hardship, said last week the impact of a severe weather event could be stressful for those affected, particularly in the dairy sector, which was still in recovering from the payout slump of 2015/16.
In some areas, farmers were already experiencing feed shortfalls and having to sell off livestock, he said.
ANZ Bank’s managing director for commercial and agri-business Mark Hiddleston also announced in December the bank would be offering farmers drought assistance packages.
Bank of New Zealand senior economist Doug Steel predicted in December prices at the Global Dairy Trade (GDT) auction would rise as a result of the drought despite an oversupply of skim milk powder in Europe.
The GDT price index rose from -3.9% on December 19 to 4.9% at the last release of figures on January 16.
Horticulture New Zealand chief executive Mike Chapman said growers were also being affected and the price of produce was likely to rise for consumers.
“No water means plants die and as a result, fresh fruit and vegetables are unavailable and prices go up because demand is higher than supply.”