Guy Trafford updates the Covid-19 situation and is growing impact on the rural sector. Decisions are hard, and in combination with very dry conditions, likely to get even harder

Guy Trafford updates the Covid-19 situation and is growing impact on the rural sector. Decisions are hard, and in combination with very dry conditions, likely to get even harder

It appears that the World Health Organisation is about to declare that we now have a pandemic. At the moment the status is a “public health emergency”. When (and if) a pandemic is declared the question arises what does that mean for us?

First the definition; in Greek Pan means all and Demos means people, so all people. In this context it means global as opposed to epidemic which refers to a more local outbreak. To be a pandemic it does not have to result in widespread deaths. According to WHO’s pandemic preparedness plan, a response to a pandemic would require national governments to action the “full mobilisation of health systems, facilities, and workers at national and subnational levels”, to “distribute personal protective equipment” and to “distribute antivirals, and other medical supplies in accordance with national plans”.

The Government has already announced that it has ordered 9 million face masks and lifted the number of flu jabs from 1.35 million to 1.6 million. Not a lot of this will stop the Corovid-19 flu which to date does not have a vaccine, although plenty of work is being done. Close to home in our family are concerns around international flights booked pre-virus with the worry being, how safe are the countries being visited? What bureaucratic complications will occur if there, when an outbreak happens, and do you lose your travel insurance if you try to bail now before having to leave? The joys of international travel.

The Government is putting seemingly more emphasis on trying to protect the population from the economic impacts. Forestry has received considerable attention with up to 3,000 jobs being lost with China wharves awash with logs from both New Zealand and Europe. Europe’s spruce forests are dying from the infestation of bark beetle. A scheme to assist with forestry jobs is offering work with DOC et al helping control wilding pines in the southern parts of the South Island and discussions are continuing with tourism to try and lure more into the country.

We don’t have much to fall back onto with regard to the effects on the economy of pandemics. The 1918 Spanish flu killed approximately 40 million people worldwide and 9,000 within New Zealand. It appears about 0.8% of those earlier populations died from that flu. This compares to around 2% of those affected with Corivid-19. Some researchers are suggesting that left “unchecked” two thirds of the population may get Corovid-19. However, with controls, i.e. quarantines, medications etc should mean that this percentage is somewhat lower. When trying to get a gauge of the effect of the 1918 flu on economies it is difficult to get a comparison. With the First World War in its final throes, the focus was on the death numbers rather than financial. However USA papers at the time reported sales and business activity reductions dropping by up to 70% with high absenteeism. Similar to the situation in China at the moment. Back then, the economic impacts appear to have lasted for a couple of years, however, governments practice more intervention now to help stimulate economies.

Predictions for world trade on one hand are being played down with the term “a bump in the road” being used. However, when airlines are expecting a US$30 billion reduction in returns of which China’s share is US$12 billion we can expect it to be a rather large bump.

With the increasing number of nations affected the economic impacts are widening and most nations trade fortunes are tied to China in some form. The world sharemarkets downward spiral is reflecting this.

For New Zealand’s agricultural sector, especially non-dairy which has some benefits in being able to be stored, the situation is looking bleak for the short term.

Horticulture have seen their returns falling away as have forestry and fisheries.

The meat sector has the added dimension of being affected by the drought and the works reducing throughput of cull ewes.

If the economic predictions are correct, then there will be a bounce back coming later this year but it is unlikely that many livestock farmers will be in a situation where they can cash in on this with the severe feed shortage occurring around the country meaning most farmers need to destock now.

Autumn starts next week so grass growing days are going to be come limited. What livestock farmers do in the meantime then becomes problematic. Feed is disappearing, schedules are falling, and the future is highly uncertain.

Processors, even Coops’, don’t have the financial resources to carry farmers losses by offering elevated prices and hoping they can recoup when/if commodity prices improve. At the moment the falling NZ dollar (currently 63.35 US cents) should be helping to mitigate prices going back to farmers, although there is little evidence of this, Unfortunately the converse is also true and when/if the “bounce back” occurs then the dollar should increase in value also and reduce the benefits flowing back down the line.

When it comes to where the sheep are being processed it seems to be a tale of two Islands. The North Island is considerably ahead of last year for lambs processed to date (up to the 25th January) whereas the South Island is ahead on the mutton kill. These come with background numbers expected for the whole season to be down on previous years for lamb but with the declining ewe flock, mutton processed numbers are expected to be about 10% up on last year. So at -8.4% compared to the same time last year there will be farmers looking to be having to hold onto ewes for a while yet. Lambs are only approaching 7 million processed out of an expected total of around 18 million means there is likely to be considerable angst down on the farm as farmers weigh up their options, bailing now, if they are able to get space if up to weight, sell to saleyards, or take a fairly risky punt and hope that prices improve in the months ahead. It may be that by, say May, store prices start to lift in anticipation of improving prices some months ahead, but who would know.

The picture for beef is looking healthier with numbers processed up across the board as farmers have cashed in on the good prices being paid by the works leading up to Christmas. Total cattle processed numbers are expected to be slightly down on last year although up on the 10-year average.

The double whammy of drought and impacts of Corovid-19 has created an almost perfect storm with the only positive is that prices started their fall from record highs giving more room to absorb the drops.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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27 Comments

I had some rain at the weekend, it was very localised, my problem is the heat has really knocked my pasture, it's a mess, i'm going to have to oversow paddocks when/if it next rains, that's going to be expensive. I have Tasmanian grass grub on the veranda at night and rather a lot of crickets too.

My neighbor told me that it is critical for cereals to cool off at night, if it doesn't get below 27 degrees the grass will die, being a cereal. We had weeks in the low 40's with night temperatures in the low 30's, that could explain the state of much of my pasture.

Here in the B of Islands we had about 2 mm rain saturday, evaporated within an hour.
Really dry, the only green is kikuyu and the weeds.
I can see a few showers towards the eastern hills, nothing gets here though.

just talked to a mate in Nth Canterbury he's really dry too.

Rain and low temp a pleanty in Dunners.

Oh dear antonymouse my heart bleeds for you - given you are an incessant climate change denier and all. Well suck it up old chap - here let me remind you of the NIWA climate change predictions from way back in 2008 for your neck of the woods:

''Rainfall: -NIWA says the overall picture continues to be for a drier climate in most of the east coast and north of the North Island, coastal Canterbury & coastal Marlborough, and for a wetter climate in the west and south of South Island. I recall it was a tad dry for you last year too?

https://niwa.co.nz/news/new-climate-change-projections-released-for-new-...

Well there you go old chum - welcome to your lovely new drought ridden future - it's right here in the now. Yum, hope you and your kids savour it.

This site has a graph of annual rainfall in Hawkes Bay 1870-2013,
https://www.warwickhughes.com/blog/?p=2155
And as most climate realists would expect THERE IS NO TREND IN RAINFALL. Climate models are unbelievably crude compared to the systems they attempt to model and as such nearly worthless as predictive tools.

There was no trend up until 2013 but there will be in the future.
These days climate models are enhanced weather models running further into the future at lower spatial resolutions. The laws of atmospheric physics are well understood. What we don't know is future greenhouse emissions and when certain tipping points will be activated.

We had around 25mm Eastern BoP. We still have some green with 10% in chicory those paddocks are green. Currently feeding heaps of my only supplement silage and resting the chicory for 7-10 days. The forecasted was for showers most days which would have helped the plan, but so far it doesn't look so good. Hopefully 10% of the herd will go as culls Friday.
Went to Morrisville last week, retreated back to the relative Oasis.

Someone from Bennydale was saying that area is a drought zone too, I thought it always rained in the King country, so it must be fairly general. Im warm enough to grow grass in winter, this drought is dry to the mountains, the back country will need rain very soon or things will be bleak in winter.

I am looming for a bug out area in the Sth Island. Needs to have pleanty of hunting and fairly warm for a winter veg crop. Deals to be done cash wise / swap for services. Isolation a main concern.
Sitting in my house in a lock down without control over my incoming tucker not a viable for me.
Building / hunting / 'can do' / #8 plus electricial tape in abundance as well as funding for the ideal spot.
Deals to be done.. no worries.

you could try the Chatams or Stewart Island.

The Sounds with a better winter veg crop sounds better.
I have a spot in mind bit if I could help someone out allong the way that would be better. It's just how I roll.

The economic effects of virus avoidance - sporting events cancelled, airlines not flying, job losses where ever you look, will have an unintended upside, if it can be called that - carbon emissions will fall dramatically ( shame about Europe' spruce trees ). The situation could actually be described as a very good dry run for what zero carbon will look like. Meanwhile, irrigated Canterbury keeps trucking on, albeit getting a bit tight - will soon have to drop from 6.75 heifers/ha to 5.75.

Andrewj. Having missed the boat in November to unload finished steers I am now between a rock and hard place. Studying international pricing seems to paint a different picture than what processors are offering locally.
Do you agree or have you read differently somewhere?
Are we just getting screwed over in NZ because of the dry?

Sorry to hear that Wilco. I have a few big steers here. Too big for local trade but if I keep them much longer they will probably soon be small enough ;-)

I haven't heard much from the States you can try this site.

http://beefmarketcentral.com/news

or this
https://www.beefcentral.com/trade/coronavirus-dents-beef-demand-but-chin...

I spent today with a couple of farmers today who complained the whole time about lack of space and yet companies buying stock in yards and going straight to works. Also they thought the backlog of dairy cows was going to become a big issue. One of them has been waiting 6 weeks to kill bulls, the other is waiting for 350 old ewes to go, meantime he's having to feed them.
You could have chased a mouse across their farms all stock being fed supplements.

plenty grasseed/ barly straw available in canterbury region get in quick before it is all sent to south korea and japan.
Feed grains available too.

how many steers are we talking?

Thanks Andrewj. Unfortunately enough steers to buy a house any where except Auckland. Metaphorically speaking it was a 4 bedroom with swimming pool, on current schedule maybe 2/3 bedrooms and no pool.
As we rear our own replacements we don't get to retain the margin because of the reduced store market pricing.

I haven't travelled North lately but I was surprised how bad the farms I visited yesterday were. I don't think they will recover fast looks like a lot of pasture damage, sitting outside last night there were beetles mostly tasmanian, lots of them. Even if it rains here tomorrow they will need to keep stock of the pasture while it recovers for a couple of weeks at least. It looks like the extreme heat has done a lot of damage to some of the grasses.
There is no rain on my YR weather map, and the seed guy said there is a high up north which will keep rain away for a bit. Last night was hot again, we had the fan on all night.
Hopefully you can get space next week.

I'm going to tough it out. We have good water and shade. But it will take weeks for our heavy county to get up and go.
Northland is dry - but a drought? I think we are getting too quick with the call, most dairy farmers, including us, are still milking at least most of the herd, most have supplements on hand, I haven't heard of any animal welfare issues. So is the 'drought call' more a stress call and more to do with our high levels of indebtedness and vulnerability of modern farming practices?

a farmer I went to yesterday had a bit of debt and he was pushing limits, then it stopped raining and he's paying the price. I suspect as we get older we run more resilient systems, it's the colder/ higher country around here you have to watch, at present it is extremely dry.

Been outside all morning and darn it's hot. Due to send all cull cows this weekend thankfully cause suddenly things aren't looking so sustainable. There's rain in our forecast for next week so here's hoping.

we had rain forecast next week too but some bugger just took it away.

I dont think much of that YR app. It is way too positive. Its been forecasting much more rain than ever materialises. Yr a dreamer app.

Made the mistake of checking the forecast this morning, all gone. Makes a mockery of simonP's comments further up.