KEY POINTS:
The East Coast drought will cost the nation more than half a billion dollars over three years through a slump in the contribution of the East Coast sheep and beef sector to New Zealand's GDP.
Reports by agricultural economists released today show the drought will cut the sheep and beef sector's economic contribution by $161 million over the three years to the end of 2008/09 - a fall of 20 per cent from the 2005/06 year.
But Agriculture Minister Jim Anderton said that because the sector's economic contribution had been was expected to increase by $136 million over the same period, the total loss for sheep and beef farmers was expected to be $297 million.
When other economic activity such as slaughter, transport and farm services such as fertiliser are taken into account, the impact on the wider East Coast regional economy will be a $326 million drop in earnings over the three years, plus the loss of an additional $375 million the farming would have generated in the region - a likely total loss of $701 million.
The national loss of over half a billion dollars was calculated from the $326 million loss of actual earnings in the region - no national figures were calculated for the effect of the $701 million drop in projected earnings.
"The drought has obviously had a severe impact on the East Coast," Mr Anderton said today.
"The next three years will be difficult for the sheep and beef sector, including those that provide services to farms affected by drought".
The drought followed some difficult seasons in recent years - particularly for those producing lamb - but Mr Anderton said many of the farms in the region still had strong balance sheets as a result of good years earlier in the decade.
The drought began with an extended spell of hot dry weather in February and March and was made worse by the lack of substantial rain until June 10, according the Meat and Wool NZ economists.
"The feature of this drought was that rain came too late for pastures to recover before winter," they said in an annual report on the national lamb crop, released today.
Hawke's Bay was particularly affected by severe feed shortages, and on sheep farms low feed levels and quality prior to and during tupping resulted in deteriorating ewe condition and lower conception rates, with fewer twins and triplets.
Some farmers had to send in-lamb ewes to slaughter, and ewe losses on-farm were boosted by poor nutrition, high worm burdens and a prolonged period of stress from the drought.
Some farms lost a lot of young lambs where lightweight ewes had an inadequate milk supply.
One-third of the region's farms show a decline in ewe lambing performance of more than 20 percentage points.
Mr Anderton said the region was a key component of the New Zealand sheep and beef farming sector, contributing approximately 20 per cent of all sheep and beef farms in the country and 20 per cent of the sector's national GDP.
- NZPA
