Signs not good for farmers

While the hit to agricultural GDP in the South will ultimately depend on the weather from now on, the signs are not good with the dry conditions coming so early, and February - usually the driest month of the year - still to come, a BNZ report says.

December was the driest month on record for most of Southland with as little as 3% of the historical average rainfall in some parts.

Rain yesterday temporarily relieved the dry spell but more was needed to break the pattern, Environment Southland environmental technical officer Karl Erikson said.

Alliance Group had put in place extra capacity for sheep, lamb and cattle at all its South Island plants, group livestock manager Murray Behrent said, when contacted yesterday.

The company was meeting demand and while there was "a bit of a backlog", it was not too serious yet, he said.

A large number of store lambs were being sent to North Otago and Canterbury, the largest issue being getting stock trucks. There was demand for stock in Canterbury, "which was a real saviour", Mr Behrent said.

Mr Erikson said there was as much as 30mm of rain in upper river catchments but only up to 5mm in coastal areas. More rain was predicted.

River levels had been boosted by the rain but it would take extended periods of rainfall to have a significant impact on the deficits most were experiencing, Mr Erikson said.

Council staff were continuing to monitor the water levels across the region and staff would meet today to assess the situation.

The dry spell was affecting grass growth and agricultural production, with reports of slowing growth in milk production and restricted weight gain in livestock. Contingency plans had already been brought into action and farmers were selling stock.

Any dent to agriculture in the south mattered for the wider local economy, more so than elsewhere in New Zealand, BNZ economist Doug Steel said.

Agriculture directly accounted for about 20% of Southland's GDP, and considerably more, if the indirect or flow-on effects were included.

That was the highest agriculture share across the major regions of New Zealand and about four times the national average.

All was not lost. A decent amount of milk already been produced, thanks to a strong start to the dairy season and the payout was good.

Lamb and beef prices were strong and Southland's lambing percentage last spring was 126.1%, well up on the previous storm-induced shocker of 113.5%.

Fattening them was now the issue.

Southland farmer and Federated Farmers adverse events spokesman David Rose said while a southern drought was usually measured in weeks than months, it had put stress on farms still recovering from the 2010 spring snow storm.

"That's why farmers have taken the unusual step of destocking or sending stock north to Canterbury. Usually, it's the other way round. While we're using supplementary feed right now, the bigger concern is for winter feed crops that are starting to die off."

In direct contrast to Southland, many areas in the North Island and top of the South Island received record high rainfall in December.

Despite the regional differences, the national agriculture production season still looked to be shaping up to what the BNZ had anticipated back in early November - a modest 2% rise over the year to June 2012, Mr Steel said.

That included a decent rebound in national sheep meat production from last year's drop, about 5% growth in overall milk production for the season and a large drop in horticulture production, driven by the Psa disease affecting kiwifruit vines.

Another possible impact on the economy from the dry conditions in the South was the effect on hydro-electricity generation.

Earlier this week, the water storage in the hydro dams stood at 87% of average for this time of year. While below average, it was not overly concerning at this point.

- sally.rae@odt.co.nz