November 30, 2007

Drought causes multimillion damages in New Zealand livestock

Cattle, sheep and lamb producers in New Zealand (NZ) are going to face a dry profit next year as drought conditions continue to wreak havoc in the east coast with damages costing NZ$700 million (US$541.29 million), according to the Ministry of Agriculture and Forestry.

Beef and sheep incomes are seen to drop 20 percent (NZ$161 million) at the end of the 2008-09 financial year as against the 2005-06 year. Given that incomes were expected to rise over this period, this results in a NZ$297 million total loss in gross domestic product (GDP). It is also estimated that GDP will fall by NZ $701 million over three years due to the multiplier effects of the drought onto the rest of the business community.

Adding to the impact of the drought, NZ farmers are also being faced to deal with a very high NZ$ and lower commodity prices for lambs and wool.