Dry conditions in the North Island could cause the price of vegetables to rise for consumers, growers say.
Fruit and vegetable grower Pravin Hari has been on his Pukekohe farm in South Auckland for 15 years and says he has never ever seen conditions like this.
Irrigators are working double time to try and soften the cracked hard ground and that comes at a cost.
"The cost of production is just sky rocketing. It's out of control, we've never seen it like this," said Hari.
"To grow a really high quality product is getting harder with the conditions that we're in. You tend to lose a lot, you're fighting things like mould and bacteria, rot and things which you normally wouldn't have to at this time of year."
The situation is simliar further south in the Manawatu Rangitikei region, where rows of new cabbages should be flourishing, crops are dusty, dry and brown.
Woodhaven Gardens' John Clarke says plants are starting to die in the ground.
"The crops that we're trying to plant now and estabish are our winter crops, so it does mean that those crops will either be coming on late, or won't come on at all."
Potato farmers are suffering too. Rangitikei potato grower Ian Corbett says the next 10 days are "really going to start knocking the crops around" as there's no rain in the forecast.
And some growers are predicting veggie prices will go up if the drought continues for too long.
"Growers just haven't got it there to harvest. Our industry is a supply and demand industry and it will effect the retail pricing," said Clarke.
But its not bleak for everyone - onion crops are in good shape.
"These dry conditions suit onion harvest, and suit quality especially since we're aiming for the high end export quality," said Pukekohe Vegetable Growers Association president Grant Ryan.
Return to recession?
The widening drought is casting fresh gloom over the economy and the Government is not ruling out a return to recession.
Finance Minister Bill English said yesterday that the Treasury was having to rework its forecasts to take account of the economic hit - and that would further affect the Government's books.
"There is going to be significantly less farming income, and that will affect the tax take in the short term," he said.
Gross domestic product would also shrink.
The 2007-08 drought had a $2.8 billion economic impact, in on-farm and off-farm costs. Some estimates put the current drought at $1billion, and Federated Farmers says the cost is growing by the day.
That could knock the Government's pledge to return the books to surplus by 2014-15 - a target already on a knife edge.
English acknowledged the drought would "clearly be a setback" to previous projections of a $66 million surplus in 2014-15.
"I think any pickup in revenue we might have been expecting is likely to be pegged back by the drought."
But he said the Government remained committed to the surplus target. There had been some trade-offs: dairy volumes were down, but prices had gone up "quite considerably".
"[But] as the area covered by the drought broadens, clearly the implications for the economy are more significant."
Treasury's downside scenario in December's half-year economic and fiscal update suggests it would not take much to push the surplus target off track.
Shaving just 0.5% off economic growth over the five years till March 2017 would see core Crown revenue cut by $7.9b and debt rise.
Only last month, the Treasury was celebrating a lift in the economy. But as the drought deepens, English would not rule out a return to recession.
"We don't know the extent of the drought yet . . . so we can't rule it out."
The Government has officially declared drought in Northland, Auckland, Waikato, Bay of Plenty and Hawke's Bay. Regions including Manawatu, Rangitikei and Wairarapa are likely to follow suit if rain does not come soon.
Wairarapa farmers were expected to formally petition the Government today to declare the region in drought.
A drought declaration entitles farmers to special assistance, including a means-tested hardship grant equivalent to the unemployment benefit.
Work and Income confirmed yesterday there had been no payments or applications for grants under the rural assistance scheme since drought was declared in the five regions.