Drought, low finance equals $500M loss

Press, 21 July 1989, Page 5

Drought, low finance equals $500M loss

By

CHRIS MAHONY

A fall in agricultural production caused by the drought and low farm investment levels will be equivalent to a $5OO million reduction in export receipts next season, according to the director of the Meat and Wool Economic Service.

Mr Neil Taylor, addressing the meat and wool section of South Canterbury Federated Farmers last evening, said he was confident that the farming industry would prosper in the next decade, but he warned that recovery would be slow. -

He said that wool and lamb production were expected to fall 5 and 11 per cent respectively next season, while the mutton and beef slaughterings are expected to decline about 18 per cent.

He said that the decline in stock numbers could take some years to reverse.

“At the farm level high

interest payments have resulted in a priority to reduce debt where possible rather than on-farm spending.

“This situation is expected to continue over the next few years and to slow any recovery in stock numbers from the drought.

"While there is cautious optimism for prices next year, this is not expected to lead to any growth in stock numbers. At best there will be some catchup on deferred maintenance,” he said. Mr Taylor said that the legacy of debt — largely built up in response to various Government policies in the past — remained a problem for the industry and its financiers.

He also warned that New Zealand’s competitive advantage in agriculture could be jeopardised by declining investment in research and development — particularly at Government level.