Economist: Rain means $100m boost for dairying

Milk production will be up 5 per cent this season the BNZ reckons. Photo / Brett Phibbs

Rain around much of the country has been bad news for holidaymakers but the weather has been good for farmers this season, with one economist estimating it is worth more than $100 million to the dairy sector.

The National Institute of Water and Atmospheric Research said most of the North Island and northern South Island experienced rainfall well above normal for December, while in the south and west it was well below normal.

BNZ economist Doug Steel said dry weather in the south had been offset by rain in the rest of the country.

"So while there's good bits and bad bits across the country, overall our forecasts still pretty much remain intact."

The bank predicts milk production for the season will be up 5 per cent.

Steel said there was an underlying structural move towards dairy, although the weather this season would be worth more than $100 million towards forecast production growth for the sector compared with last year.

The NZX Pasture Growth Index - which measures temperature, rainfall and sunshine hours - had fallen sharply for the South Island, primarily because of dry conditions affecting Canterbury, Otago and Southland.

NZX Agrifax dairy analyst Susan Kilsby said the index overall was up.

"I think it's starting to trend back more towards long-term averages for this time of the year but for all of the spring and early summer period it was well ahead."

Dairy production for the season was expected to be up by between 7 and 10 per cent on last year, Kilsby said.

"This season it's the weather that's made the biggest difference in the production. Before the season started we were predicting a 3 to 5 per cent increase ... so we've basically doubled by good weather."

MetService meteorologist Daniel Corbett said Southland had been drier than normal. "[It] picked up some much-appreciated rain [last week] across Southland and Otago but that was probably the first decent rain in a month," he said.

The country was in moderate La Nina weather pattern and would continue to be so for the rest of the summer.

Rainfall for most of the North Island for the next four to six weeks in general should be just above normal levels, while the far north of the South Island would be about normal or above. Further south, including Southland and Central Otago, rainfall would be about normal or below.

David Rose of Federated Farmers said that until a few days ago he had had 6mm of rain this month on his Southland farm - now he had had 73mm.

"[Farmers'] winter-feed crops have had huge relief now ... that was a big worry but we've also got the driest month of the year in front of us so we're still not out of the woods yet, but we're in a much better position really."

He said there was a huge sense of relief in Southland.