Dam attracts meat and dairy farming

HBRIC had made "reasonable progress" signing up farmers "given we've been dealing with a lot of ambiguity around the consenting process until now". Photo / File

Dairy farming is set to grow in Central Hawke's Bay if the Ruataniwha dam goes ahead - despite tumbling dairy prices putting the sector under huge pressure in other parts of the country.

The dam's promoter, Hawke's Bay Regional Investment Company, says an analysis of contracts to join the irrigation scheme shows about 30 per cent of farmers plan to use the water for dairying.

That figure is in line with a forecast in a business case for the scheme put to HBRIC's owner, the Hawke's Bay Regional Council, last year and is a jump from the 13 per cent of land in the dam footprint currently used for dairy farming.

HBRIC chief executive Andrew Newman told a regional council meeting this week that more water from the scheme would be used for red meat and arable farming than for dairying, based on the contracts the company was signing.

Those who were signing up to take water from the scheme for dairying tended to be existing Central Hawke's Bay dairy farmers and were not fazed by the recent fall in global dairy trade prices, Mr Newman said.

"Those parties that are entering into contracts are looking way beyond this particular commodity cycle," he said.

"They tend to be bigger enterprises with very strong balance sheets."

In a report prepared for this week's council meeting, HBRIC said farmers in the dam's irrigation footprint had signed contracts for, or were in the "contracting process" to take, 35.7 million cubic metres of water from the scheme - about 10 million cu m short of the amount required for the project to proceed.

A further 22 million cu m of water was in the "negotiation and due diligence" phase.

About 23 per cent of farmers in the area had said they would not take water, which was "to be expected", Mr Newman said.

"That is exactly what our process is about and the sooner that we identify parties that don't want to proceed the better it is for us, because we can concentrate on the customer base that does."

HBRIC had made "reasonable progress" signing up farmers "given we've been dealing with a lot of ambiguity around the consenting process until now".

"Now that we have the consents granted for 35 years, we're in a much more confident place around progressing that work and we expect to see that reflected in progress going forward."

The company has given itself until November to get to "financial close" - the point at which it has secured all required funding for the $275 million project and has enough farmer support to make it financially viable.

The regional council has agreed to invest up to $80 million in the scheme if it goes ahead.

Valuation service Rural Value said yesterday there were indications the dairy price fall was already leading to a "change in sentiment" which could see farm sale prices fall in some parts of the country.

But Rural Value Napier valuer Bevan Pickett said sentiment in the wider Hawke's Bay rural market had been positive this year.

"The dairying portion of Hawke's Bay's rural profile is relatively small and confined largely to the southern and western portions of the district. For these farmers the impact is real and there will be some clear effect on the region."

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Hawke's Bay Today

will hold a public meeting in Napier on Thursday to discuss the Ruataniwha water-storage scheme. HBRIC staff, directors and consultants, alongside speakers invited by Transparent Hawke's Bay, will take part in a panel discussion at the meeting, to be held at Tamatea Intermediate School, starting at 6.30pm.

Questions on the scheme will not be taken from the floor but readers are invited to email questions to editor@hbtoday.co.nz

People will be asked to make a gold-coin donation to the Limitless Help Emergency Shelter Appeal.