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RBNZ's Bollard wary of drought impact on economy, particularly given more dairy farms now than in past

RBNZ's Bollard wary of drought impact on economy, particularly given more dairy farms now than in past

Reserve Bank Governor Alan Bollard has told Parliament's Finance and Expenditure Select Committee that he is watching the progress of the drought closely because it represented a signficant downside risk for the economy.

Bollard was asked about reports that drought in the Waikato was acute and at 'February levels'.

He said the initial signs were that a drought had yet to hurt export returns substantially, but he was watching it closely. He noted that the growth in the dairy industry appeared to increase the impact of any dry weather on the economy compared with previous dry periods.

Bollard was also asked if he had 'lobbed a grenade' into the political process by challenging the government to reduce its deficit to help keep interest rates and the New Zealand dollar down.

He denied he had lobbed such a grenade, saying it was similar to previous comments, although the surprising warning from Standard and Poor's had made the situation more acute.

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9 Comments

 "The Ministry of Agriculture and Forestry (MAF) is expected to recommend that the Waikato region be declared a drought zone." rnz

Farming worldwide has to adopt to Climate Change - like never before in human history.

I cannot see this is happening - e.g. New Zealand. The consequences are loss of stock/ land/ clean water/ etc. (massive costs) and as a consequence rapid food price increases and the suffering and starvation of the poor(er).

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 PM - Kiwis the world leader of a “NZ100% Pure Economy”

Kunst - you should hear what my Aussie mate (inland NSW) is saying! Actually, you shouldn't.

We'll be OK here, if not invaded - only 4 million of us, and some of them are sheep.... might keep the December (last night, never ever happened till now) frost off the spuds.

I came back across the Pacific revently - the ocean temp was about 1deg warmer than it should have been - which is huge. Watch for Southern Hemisphere cyclones this season....

PDK

An another issue a few days ago I wrote:

“ The NZ100% pure Cowpat- Factory ” - a proud NZcompany - 100% funded by the NZtaxpayer.

The risk of destoying sustainable NZfarming, NZeco tourism our NZenvironment and our NZhealth is growing.

PM - I think you really don’t know, how many billions of $ we have to spend in the next few years cleaning up this country in many aspect of life/ business ?

In stead of bloody creating an artificial financial South Pacific hub you better get more practical and learn how to use a broom. ..and PM prepare some sandbags too !

I have forgotten to mention new diseases affecting our natural environment and the farming communities - because of Climat Changes.

The North Atlantic is a whopping ten degrees colder than avarage...Its gonna be a long cold winter.Note the early onset of winter.As the Gulf stream packs up we might see mass migration on a hitherto unheard of scale.Plus larger storms in the Gulf of mexico as the heating gets going.Buy food cus its gonna get pricey.

Never worry about the world running out of food - there is so much upside.

Eating beans wheat or corn for protein  instead of turning it into beef pork and chicken would release huge volumes of perfectly acceptable and healthier food volumes at a fraction of the price.

Most of the worlds agricultural producers suffer from low prices due to overproduction - just look at our dim witted wine growers.

With price increases the Russia's and Ukraines of this world can produce massive volumes of additional food.

 

and how much kiwifruit was being destroyed here last season to manage the volume and price?

JB- you're not an economist, are you?  They think like that.

There are two billion (of 7 ) not fed enough - who wake up wondering how to get enough to eat. Or drink.

The other 5 billion rely on fossil fuels to fertilise, till, sow, harvest, transport, process and retail.

That commodity just hit the straps.

It would be a brave soul who predicted an increase......

You're right about grains vs meat, per hectare and per energy input, though.

It ain't the whole answer, but it's a time-buyer.

MetService's Bob McDavitt said weather monitoring instruments were now registering a situation that had not been seen since December 1988.

"We're getting the same patterns and they're pretty rare patterns so we look to previous summers as indicators as to what to expect this year."

This weather pattern is identical to the 1988-1989 La Nina summer. It is also similar to New Zealand's summer over the new millennium in 2000, he said. "It's likely you'll be saying to yourself during the 2011 summer, 'I've seen this rain before, I remember it from the summer of 2000'.

"But it's most likely we'll get the heavy rain of the 1989 summer, if our indicators are correct."