NZ GDP likely to take a hit due to drought crisis

FXStreet (Bali) - The Minister for Primary Industries in New Zealand, Nathan Guy, is expected to declare South Canterbury and North Otago drought areas, when he visits the rapidly depleting Opuha Dam, near Fairlie, today, notes Jamie Gray, a business reporter for the NZ Herald.

Key Quotes - via NZ Herald

Parts of Canterbury, Marlborough and North Otago are suffering from abnormally dry conditions and most of the country is drier than usual. Tony McCormick, chief executive of Opuha Water, said the dam, which has been on restrictions since December, was now just 9.5 per cent full. "We are looking very much at a scenario of nearly zero storage," McCormick said.

Irrigation will stop when there is a metre of storage left, which will be then used to augment the nearby Opihi River. "In a fortnight, we will have to turn off all irrigation," he said. "It really is an extreme climate event that we have not seen since the dam was built." The dam serves its 250 farmer shareholders, who have 16,000ha under irrigation.

For drought, or "adverse event" declarations, the Government classifies how serious the problem is and how localised it is. If the Government declares a medium-scale adverse event, much of the support made available to affected farmers will be similar to the support made to any business or family in adversity.

Under certain circumstances, drought-affected farmers can defer tax payments and assistance is available through the Rural Support Trust. Last month, Westpac said dry weather throughout much of New Zealand was likely to take a "significant chunk" out of GDP growth over the first and second quarters.