Waikato drought a first for region 

A drought has been declared in the Waikato region for what's believed to be the first time ever.
 
The crisis is the result of a wet spring, a hot dry summer and low reserve feed supplies and it's beginning to take a  toll on farmers.

The normally lush pastures of the dairy heartland are now just fields of dirt as Waikato records the driest January in 100 years.

"It's pretty major being so early in the season. Normally at this time you can get quite a bit of production," says John Bluett, dairy farmer.

He's expecting to take a large hit in the pocket., but is trying to slow down his losses by keeping as many cows milking as possible "so that when it does rain we can harvest that grass and convert it into milk production."

High cost

Fonterra says the worsening drought situation could cost its dairy farmers as much as $500 million by the time the season ends in May.

Chairman Henry van der Heyden says the dry spell has already cost farmers about $60 million in milk payout, and on-farm losses would continue to mount unless there is significant rainfall.

"The weather is key. And every day without rain is hurting farmers, and will have a flow-on impact for local communities and the broader economy," van der Heyden says.

"This has really taken the shine off what should have been a fantastic season for our farmers, with a record payout."

Van der Heyden says. farmers are facing up to very real challenges of lost cash flows and managing their farms with very little feed available.

He says Fonterra had forecast a 3% increase in milk supply for the 2007/08 season. However the record dry summer over much of the country means season-to-date milk production is now falling below last year.

On a daily basis compared to the last year Waikato milk production is down 27%, Bay of Plenty is down 21%, Taranaki is down 9% and Southland is down 1.5%.

He says while Fonterra is now facing something of a double whammy of a drop in milk production and a Kiwi dollar close to US80 cents, the co-operative is holding to its forecast of a payout of $6.90 per kilo of Milk Solids.

Support packages

The Ministry of Agriculture and Forestry (MAF) is rolling out a range of support packages for farmers affected by Waikato's drought.

Southland, Canterbury, Central Otago, South Taranaki and Hawke's Bay are all expected to follow suit.

National drought co-ordinator Phil Journeaux says they are in the process of assessing how much supplementary feed is available.

He says tax provisions, income equalisation schemes and welfare support will all be on offer.

Journeaux says the full financial impacts may not be felt until the end of the year.