KEY POINTS:
Claire Bull sounds cheerful enough as she talks about the devastating toll the drought is taking on the sheep and beef farm she runs with her husband, but her words belie a growing desperation.
She admits she is finding it harder to keep saying to herself : "It will rain, it must rain, it is going to rain."
She has stopped reading the long-term weather forecast, scared of more clear skies ahead.
Gerald Bull, her husband, is optimistic. "I find it hard to imagine the autumn rain won't come." But then he adds: "That's probably living on hope."
If urban dwellers think the drought is just hard luck for farmers, economists say the consequences will reach us all. This is one of the most widespread droughts the country has faced, and that is what makes it different from the others. Most of the North Island is affected, apart from Northland.
The situation has improved in the South Island thanks to buckets of recent rain, which also helped the hydro-dams and may help alleviate an electricity crisis.
But the drought in the North Island is spreading. Last week areas of Taranaki were added to the list of official drought areas.
On the Bulls' 400ha farm in the Waikato, the usually lush grass has turned to dust and the water in their creek, the main supply for the animals, has all but dried up.
The Bulls still have some feed in store in case the rain does not come, but many farmers are running out of feed and sending animals to the abattoirs early.
Some dairy farmers have stopped cows from milking because this halves the feed they need.
Gerald Bull predicts he will have lower lambing percentages next year because his ewes won't be in such good order. Cattle and lamb weights will be lighter and the animals will fetch less money. "If your cattle are 30k lighter there's at least $100 gone per beast."
Agriculture Minister Jim Anderton says the drought is likely to cost farmers around $1.24 billion this financial year.
That's a lot of money which now won't be spent by farmers. The lost dollars won't trickle down through the local economy into sales of farm equipment, and in turn the farm equipment sellers won't spend so much in other areas.
While the total cost to the country can't be estimated as yet, the last big drought in the late 1990s is said to have chopped around 2 per cent off the gross domestic product.
But the outlook is not all doom and gloom. Charlie Pedersen, the president of Federated Farmers, says though life for drought-stricken farmers is bleak right now, the future is rosy.
Farmers are resilient folk and the drought will break, Pedersen says. "New Zealand is one of the wettest countries in the world."
When it does, boom times are ahead.
International demand for meat and dairy from emerging economies, such as China and India, is so strong that a food-producing nation such as New Zealand will benefit.
And however bad the drought gets, New Zealand will never run out of food, he says. "In this country we produce about 20 times as much food as New Zealanders could eat their way through even if they tried."
Kevin Wilson, rural economist for the National Bank, is not so optimistic.
Annual production in dairy looks like being down 5 per cent or more on last year. This means that even with the excellent commodity prices dairy farmers are seeing through high world demand, the profitability of some dairy farms won't be much different to last year.
And when the rain finally does come, the impact of a drought can linger for a year or more, says Wilson. "A drought is a bit like a cancer. It creeps in. In simplistic terms if [dairy] production is down 5 per cent on last year ... that's $400 million that's not available in the economy.
"This means quite a bit. Tractor sales are slow. Farmers will be looking a bit harder at where they spend their discretionary money on and off the farm. There's a multiplier effect from all that.
"In some areas new car turnover will slow. Repairs that might have been done on the house - which employed the electrician, the carpenter and the painter - might not be done.
Last year's export figures show how much the nation's farms mean to the New Zealand economy: lamb brought in $2.3 billion, beef $2.1 billion, dairy $7.2 billion and raw wool $624 million. New Zealand gets more than a third of its export income from meat, wool and dairy products.
Rob Davison, executive director of Meat & Wool New Zealand's economic service, says he cannot predict how much exports may fall because of decreased productivity brought about by the drought.
Exports may actually increase in the short-term because when there is not enough feed more animals are sent to the freezing works.
But even though overseas prices for meat have been up, the strong exchange rate is gnawing away at profits for sheep and beef farmers like the Bulls.
Donna Purdie, an economist at Westpac, sees the drought as taking a little of the gloss off what is a boom time for dairy in particular.
And on the upside there has been quite a bit of rain in the south so the hydro-dams are not as empty as they might be, improving the outlook on the electricity front, she says.
However, the reduced supply of dairy and meat, combined with the high world demand, means consumers will pay more in the supermarket for the likes of milk and cheese, prices of which have already doubled in the past 12 months.
"You're seeing in the official statistics food prices rising significantly now and you've got all the other costs that are hitting household budgets - the rising interest rates, higher petrol prices, the housing market collapsing ... all these negative things going on."
Business confidence is down and consumer confidence is likely to be down also.
It might all feel gloomy, but Purdie says we should keep the gloom in perspective.
New Zealand's terms of trade - export prices relative to import prices - are the best they have been in 33 years and the country has very low unemployment.
It all helps to stave off the gloom.
