New Zealand Drought Concerns Ease After Significant Rainfall, Carter Says

Concerns that New Zealand’s North Island may fall further into drought have eased after significant rainfall in the last month, the government said.

The impact on farmers in drought-affected regions and other dry areas in the North Island, including Manawatu and Wairarapa, won’t be as severe as first thought, Agriculture Minister David Carter said in a telephone interview on Jan. 25. No further areas pose a concern “at this stage,” he said.

The government last month declared a medium-level drought in Northland, Ruapehu and Waikato, the nation’s biggest milk- producing region, amid a so-called La Nina weather pattern, which brings high early-summer temperatures. The North Island received as much as three times the average January rainfall with as much as 200 millimeters recorded in Waikato, according to the National Institute of Water and Atmospheric Research.

“When the drought was declared prior to Christmas the fear was that the dry conditions could have continued, in which circumstances would have got much worse,” Carter said. “We had to be preparing ourselves for the worst. That hasn’t eventuated.”

New Zealand’s last severe drought in 2008 cost the economy NZ$2.8 billion ($2.1 billion) and took farmers years to recover from, Carter said. The cost of this season’s drought won’t “be anywhere near that figure,” he said.

Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, last month said New Zealand milk output dropped 4.7 percent in the North Island from a year earlier. Whole-milk powder prices at the company’s GlobalDairyTrade auction rose to the highest level in more than seven months last week as buyers sought to ensure supply. Fonterra reduced by 1 percent its forecast supply of whole-milk powder available at the auction.

“I don’t think I could say it’s unlikely we’ll have further drought declaration between now and winter, but at this stage there are no areas of concern,” Carter said. “Anything could happen, we could now go into a long, dry period.”

Chances are now 40 percent that flows and soil moisture will be below average for the time of year in Northland and Waikato, Wellington-based NIWA said Jan. 11.

To contact the reporter for this story: Phoebe Sedgman in Wellington at psedgman2@bloomberg.net.

To contact the editor responsible for this story: Iain Wilson iwilson2@bloomberg.net

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