Saturday, December 2, 2023

Cyclone Gabrielle a billion-dollar blow to farmers 

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That doesn’t include costs to the nation in terms of public infrastructure, food shortages and inflation.
Finance Minister Grant Robertson says the government is not able to pay the full cost of the recovery but the package will ensure banks continue to play an integral role in it.
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Cyclone Gabrielle is shaping up to be New Zealand’s most expensive weather event in terms of its spread and scale, says Federated Farmers chief executive Terry Copeland.

“The fact that Cyclone Gabrielle has claimed at least 11 lives is devastating but quite honestly we’re very fortunate the toll isn’t a lot higher,” he said.

The Feds policy team estimates total on-farm costs, including income disruption, infrastructure repair and crop or orchard restoration bills for all affected farmers and growers, could top $1 billion.

That doesn’t include costs to the nation in terms of public infrastructure, food shortages and inflation.

By way of comparison, 1014 farms were damaged by severe flooding in 2004.

In that event, there were 5000 sheep and up to 1000 dairy cattle lost; 20,000ha of farmland under water; $5.8 million in losses from dumped milk (for Fonterra alone); $24m in damage to rivers; an estimated $159m-$189m damage to farms and another $200m in uninsured damage; and $77m in damage to road and bridges, according to Federated Farmers.

“Cyclone Gabrielle’s impacts are a quantum bigger,” said Copeland, noting those costs are in 2004 dollars. 

The storm wreaked havoc over nine provinces, versus five in 2004, and damage to rural infrastructure seems much more severe.

Horticulture businesses in particular have suffered significantly higher damage in the recent event.

Federated Farmers’ Gisborne-Wairoa acting president Charlie Reynolds said restoring fence lines – critical to livestock feed management – costs around $25,000 per kilometre. There are plenty of farms in the region with 10km or more of fence line slumped or washed away.

An apple orchard is roughly valued at about $100,000 per hectare (excluding land value).

Some 2100ha of orchards in Hawke’s Bay alone have been destroyed or severely damaged.

Rural insurance specialist FMG is already handling more than 3,000 claims from Cyclone Gabrielle.

The government has recently stepped up with $26m of direct support to farmers and growers, in addition to the $25m announced last month, with a larger recovery package in development.

“That’s a strong response, and very welcome,” Copeland said.

“But I think everyone – including the government – knows it’s only a step along the long path to recovery.”

Meanwhile, economist Cameron Bagrie said the Feds’ estimate is likely “way too low”. 

“The income disruption to pipfruit alone is in the billions. This is a multi-year income loss where the sector will be below 2022 production for an extended period. This reality seems to be overlooked,” he said in a LinkedIn post.