Westpac NZ is urging farmers and growers to prepare now for a dry summer, as likely El Niño conditions raise the risk of drought across parts of New Zealand. Research published by the bank's economics team earlier this month on the likely impacts across the north and east points to a potential 1 per cent hit to GDP if conditions follow past severe droughts.

"Every farming and growing operation is different, so now is the time to think about what El Niño could mean for your business and what steps you can take to manage the risks," said Richard Anderson, Westpac NZ's head of agribusiness, stressing that the worst outcome is not guaranteed but that the time to build flexibility is now — and that financial planning deserves the same attention as operational planning: updated budgets, regular forecast checks and readiness to adjust.

Some farms may face higher costs for bought-in feed or irrigation; others may choose to sell stock earlier than planned to bring revenue forward. Anderson suggests long-standing owners revisit what worked in previous El Niño years and newer owners talk to the previous owners, since "that local knowledge can be invaluable".

The bank's practical checklist: livestock farmers should put water supply and feed security first — check dams, troughs and reticulation, review baleage, silage and hay, and consider securing feed or locking in contracts before demand rises; farmers with trading stock should set trigger points for earlier sales if feed tightens; fruit, grain and horticultural growers may benefit from warmth but should check irrigation for leaks, repair valves and pumps, maintain storage tanks and factor in possible water restrictions.

Anderson said most farmers and growers are financially well placed for a dry summer: "Arguably the industry is in the best position it's ever been to face into El Niño, thanks to generally low debt levels and high commodity prices." The concern he hears from customers is on-farm inflation, driven by fuel and fertiliser, which makes cash forecasts and market watching essential. His closing advice is to talk to the bank early: "The sooner we understand your plans and challenges, the better positioned we are to support you." Rural News staff reporters compiled the report.

Source: Rural News Group