Drought problems ‘not met by Government’

Press, 31 March 1989, Page 16

Drought problems ‘not met by Government’

Farmers are understandably disappointed in the drought package announced by the Government on March 16. The

fact is that it is not really a drought rehabilitation package at all. It is a restructuring package. To begin with, it is targeted fairly narrowly. Probably less than 25 per cent of farmers hit by the drought will obtain assistance in rehabilitating their farms. Others are expected to make good the damage on their own, while a fairly high proportion, possibly as many as 20 per cent, are being told to get out of farming altogether. Even for those who will receive some assistance, the package does not address the problems actually caused by the drought. The main feature is assistance for the next two years in obtaining and servicing seasonal finance. It provides no help in terms of the major deterioration in capital that has occurred on many farms in the region over the last 15 to 18 months of the drought. For cropping farmers, this has perhaps been less of a problem and the package may provide some with the means to carry on. It does not make good the losses sustained this year with crop yields typically down by 60 per cent. At least some may be able to pay for next season’s seed and fertiliser and keep going. But for livestock farmers, and in particular sheep farmers who form the bulk of farmers in North Canterbury, the problem is not just a question of funds to pay this year’s production expenses. Many have very little left to produce from. Pastures throughout the region have withered and many have died. Stock, which could not be fed, have either been slaughtered, or have been moved out of the region. The M.A.F. estimated from its drought survey in January that stock numbers had been reduced by around three and a quarter million units, or 40 per cent of the total stock in the region. Nearly three million head of these were breeding ewes and replacement hoggets. In November, the Government gave strong indications that help would be forthcoming to bring this stock back to the region. It did so specifically to encourage an orderly destocking at the time. Farmers have been waiting to see what form of help would be available. Now they know. If this package really is the last word on the subject as the Minister has suggested, many of those stock will not now be coming home. The Government faced a dilemma with the drought which goes right to the heart of the debate on economic philosophy. If it intervened to make good the damage, it would be responding to natural events that have happened before and might happen again, perhaps encouraging farmers to continue farming in a way that is not sustainable long term. That would leave the door open to further handouts in the future if things go wrong again. would almost cer-

PROFESSOR TONY BYWATER,

By

of Lincoln College

tainly have caused a distortion in the normal operation of the market place by increasing the demand for stock and feed which would continue to be scarce. Far better to hold back, let those farmers who have to exit do so, and allow a more efficient system which is not dependant on the Government to emerge. In the process, some of the problems that have been building inQ agriculture over the last five years might be sorted out. Farmers unable to cope with the downturn and whose debt has been inceasing can make way for new entrants or be taken over by neighbours who are in a stronger position financially. On the surface, there may be some logic to that. But there is another side to the story which raises some fundamental questions for Canterbury, if not the rest of the country. First there is the cost. Even under normal circumstances, there are adjustment costs but in the current situation the costs may be very large.

The East Coast of the South Island is a summer drought area. Pastures grow in autumn and again in spring and have to be managed to provide feed over winter and summer. Farmers here know how to deal with that situation, they see it three years out of five. But this is not a summer drought. This is the worst on record. It has been going on not since last spring, but the spring before that. Feed reserves are essentially gone and now it’s a race to see whether there will be sufficient rain before soil temperatures drop too low for pastures or green feed to grow. Are the new entrants really going to get more efficient production off the land they buy than people who have farmed it for years, as the Minister claims? Where are the stock and the pasture going to come from? It doesn’t matter whether it’s a new entrant, a neighbour, or the current owner fighting to stay on his farm, if the farm is to be productive, pastures have to be replaced and new stock have to be brought in from somewhere. That takes capital and it’s going to take time, three to five years of rebuilding according to the indications from the M.A.F. survey. If the breeding stock is not there in the same numbers, that means less lamb, wool and beef flowing through the rest of the regional economy. There will be a lower demand for inputs of fertilisers and animal health care and less money to pay for them anyway. The rural centres have been and will be the most affected, but Christchurch will not be immune. Late last year, the M.A.F. estimated that the flow-on effect to the region as a whole could be as high as $l9O million with the loss of over 5000 jobs. The effects of the drought will not be confined simply to the rural sector. The regional econ-

omy still depends to a very significant extent on agriculture. Without an injection of capital to repair some of the damage, or some means of setting the cost aside as the farmers requested, the major dislocation of the farming economy will spread to other sectors as well. Even from an economic efficiency point of view, there comes a point where the adjustment costs outweight the cost of helping existing farmers through the crisis. Using the drought as an opportunity to restructure may seem like a good idea, but is the region ready to accept the cost it implies?

Then there are the social impacts. It’s inevitable that the rural population, already in decline, will decline further. It is assumed that displaced farmers will find jobs elsewhere, presumably in the cities. Leaving aside the issue of existing unemployment, the effects on rural communities and rural services are obvious. What sort of population distribution do we want in Canterbury? Whether we care about that or not, we should realise that decisions are being made on that issue as a result of economic policies which the drought package 'will only accelerate. Finally there is the question of who bears the burden of natural disasters. There is an expectation that Government will come to the aid of New Zealanders affected by adverse events. The drought may not have been as immediate or as spectacular as cyclone Bola, but the effects are as devastating and will last as long and the scale of it is even greater. All farmers in the region have been affected. Some will receive no help at all. Those without sufficient income to support basic family needs will receive income support and an extension of the exit provisions to leave; but very few will actually receive assistance to make good the damage that has been done. That is a marked shift in philosophy which affects us all. The Minister makes the point that farmers must change to dryland farming methods. There are new drought tolerant pasture species and management methods being developed, but they won’t combat droughts like this one. They may survive, but they still need water to grow. Farming systems are changing and will continue to do so. Perhaps farmers need to look at their own drought insurance programmes. These are all issues which have to be addressed but they are separate from the immediate problem of the capital required to recover.

Farmers asked for help to overcome the very large cost the drought put on them, at least to put it aside for long enough to allow them to get back on thpir feet. Most realised that the Government was not in a position to help out as they had with the victims of Bola but they expected something to help restore some confidence and give assistance to the region to make good the damage and help with the recovery.