Jamie Gray is a business reporter for the NZ Herald

Cyclone Cook could hit next season's dairy production

The wet weather, which caused flooding in some areas, could hit next season's dairy production. Photo / file
The wet weather, which caused flooding in some areas, could hit next season's dairy production. Photo / file

Cyclone Cook could have an impact on the coming season's dairy production, DairyNZ said.

The cyclone follows closely on the heels of Cyclone Debbie, which hit parts Queensland and brought high rainfall to New Zealand as well.

Combined, the effects of both events look likely to hit the tail-end of the season (ending May 31) as rain and silt acts to either kill grass or limit its growth.

Bad weather the last few weeks could lead to a downward revision of Fonterra's current estimate for a 3 per cent decline for the season from last season, but economists said the impact so far is difficult to quantify.

DairyNZ chief executive Tim Mackle said conditions were "extremely tough" for farmers around the flood-ravaged Bay of Plenty town of Edgecumbe , where a state of emergency has been declared.

"The reality is that it is now too wet for many," Mackle said. In parts of the Waikato, it was a matter of too much feed, with some farmers reporting grass growth in excess of the kind of growth normally associated with spring.

"Depending on how the winter plays out, it's possible that the impact of the rain will linger on into the next season and negatively impact on production," Mackle said.

"That's a possibility for sure, depending on how well farms manage it and how things play out between now and then," he said.

"If we had a bad winter, then it would be a challenge," he said.

Grass can survive for only a few days under water, and silting can also destroy pasture, which means some farms will need to resow.

Persistent heavy rain prompted record trading in NZX dairy futures this week traders punted on next season's production being curtailed.

DairyNZ reported that between 3500 and 4000 head of stock have been relocated from flooded farms in the Bay of Plenty.

In developments today, there has been a stopbank failure on the Rangitaiki Plains so farms that may have had floodwaters cleared, may well be inundated again once the storm hits late this afternoon and into the evening, coinciding with high tide, DairyNZ said.

Rotorua Lakes are at record highs and are expected to flood in places. Power outages are expected. Farmers have been advised to shift stock to high ground.

While the impact of the weather has been small to date, Cyclone Cook risks leading to a larger impact, ASB Bank rural economist Nathan Penny said.

"However, there is a risk that this time key dairying regions suffer some longer-lasting damage," Penny said.

"At this juncture, futures pricing suggest a lift for whole milk powder in the 6 to 8 per cent range at next week's auction," he said.

"From our point of view, this lift feels about right given the limited impact to date, combined with a risk of a larger impact down the line," Penny said.

AgriHQ dairy analyst Susan Kilsby said the higher-than-normal activity on the futures market was not surprising.

"Any weather event will create a lot of uncertainty and the futures markets thrive on uncertainty," she said.

"No one has been able to quantify the impact on this season's milk production, except that it is not going to be as strong as it previously would have been," she said.

"We were having a cracking end to the season, so it's going to take edge off that," she said.

Kilsby doubted the bad weather would have a huge impact on production on the New Zealand-wide basis.

"But there certainly will be some farmers who will struggle to get farms drained and regrassed and in a good position for next season," she said.

- NZ Herald

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