Rural centres holding strong
26th Jan 09, 11:54am
The hard times in the 1980s started in the country, moved through the provincial towns, and only after the share bubble burst in late 1987 did the worst hit the bigger cities reports the ODT. This time it is happening in reverse. Falling property prices and job losses in the cities signal tougher times there already. But while people are concerned, there are few signs the recession has hit this part of rural NZ yet. People are wary and many are worried, but one small-town retailer told me his sales for the first six weeks from the start of December had already equalled those for the whole three months of last summer. The strength of the rural hinterland is one of the main reasons that, at least for now, North Otago is defying predictions of a looming crisis. Irrigation development in the past few years, last season's dairy payout and improved returns for crops kept the district's economy buoyant even though sheep and beef farmers were getting poor prices. And defying the doomsayers, beef and lamb prices are going up. After years of falling returns, sheep and cattle farmers are having a much improved season. But the improved returns are a glimmer of silver in the clouds which so many commentators see gathering, and balance sheets are being further brightened by falls in interest rates, inflation and the price of major inputs like fuel and fertiliser. That contrasts with the 1980s, when inflation and interest rates got to more than 20%, the dollar was also high and stock prices fell. People who not only survived the ag-sag of the '80s but have prospered in its wake acknowledge that the economic outlook isn't good, but some of the lessons which helped them two decades ago will be put to good use now. One of those is the importance of containing costs, a lesson reinforced by a speaker at a dairy conference a couple of years ago. He entered the industry when the payout was $5, and a year later it went down to $3.60. But he made as much in the second year as he had in the first by keeping costs to a minimum, which is an illustration of the wisdom of our Presbyterian grandparents who taught us a penny saved is a penny earned.