A drought will cost farmers around $1.24 billion this financial year with some individual sheep and beef farmers looking at income reductions in excess of $100,000, forecasts show.
Agriculture Minister Jim Anderton said a Ministry of Agriculture and Forestry (MAF) report estimated the drought's negative impact on productionand increased unexpected costs such as feed supplementation.
The cost was based on the change in farm pre-tax profit between the budgeted positions prepared in July last year and an updated budget prepared as part of MAF's farm monitoring model in February this year.
The analysis showed that the cost of the 2007-08 drought was $894 million for dairy farming and $345 million for sheep and beef farming.
Averaged nationally the cost was $25,200 for a sheep and beef farm and $79,400 for a dairy farm but farmers in more hard hit areas would be worse off.
Some individual sheep and beef farmers were forecast to have income reductions of more than $100,000 with some having to put debt onto their mortgages.
Mr Anderton said that while the cost of the drought was significant for dairy farmers, their position was still significantly better than last financial year, because of the much higher dairy milksolids pay out.
"Sheep and beef farmers are in a very weak financial position, following two years of poor profitability. The drought couldn't have come at a worse time in the commodity price cycle for our dry stock farmers," he said.
Continued effects would impact on the next financial year with lambing down, reduced wool production, reduced capital stock, and animals in poorer condition going into next spring.
"There can be no question that the impacts of this drought on farming families, rural communities and the rest of New Zealand are severe and will be felt for several years to come."
Taranaki Regional Council (TRC) was yesterday the latest region to declare a drought after a prolonged dry spell in the area.
There has been insufficient rain since November and no rain was predicted until May.
TRC chairman David MacLeod said the drought declaration would open up new avenues of government assistance for farmers.
The drought had been declared in the area of coastal Taranaki extending south from Okato, 35km from New Plymouth, through all of South Taranaki District to the region's southern boundary, and including southern and eastern parts of the Stratford District.
