The level of annual rainfall heavily influences agriculture production volumes and quality. Ideal ripening conditions vary among fruit, so ill-timed, insufficient or excessive rainfall can damage crops and reduce production. For example, kiwifruits require frequent rainfall throughout the growing period, whereas stone fruit are better suited to dry summers.
In January 2020, New Zealand entered a drought period, as a result of high temperatures and low rainfall. Ending in April 2020, this has constituted the longest drought in New Zealand’s history and has significantly affected agricultural harvests. The following season has provided little relief for farmers, with summer 2021 again resulting in drought conditions. The droughts have significantly affected the following regions:
- The Bay of Plenty
- Hawke’s Bay
- Gisborne
- Canterbury
- Otago
Effect on agriculture
The turn in weather conditions has had a minimal effect on the Kiwifruit and Berry Growing industry, with revenue increasing at an annualised 9.1% over the five years through 2021-22, to $2.7 billion. Kiwifruit growing is prominent in the Bay of Plenty on the North Island. Harvest volumes declined in 2019-20 as a result of unfavourable rainfall, but a rise in prices has offset this decline. Increasing demand from export markets willing to pay premium prices for kiwifruit, such as Japan and countries within the European Union, has largely shielded the industry from revenue declines. However, the closure of international borders due to the COVID-19 pandemic has constrained revenue from berry growing, subsequently limiting the availability of seasonal workers required for harvest seasons.
New Zealand’s Grain Growing industry is primarily located in the Canterbury region of the South Island. Unlike the Kiwifruit and Berry Growing industry, price increases have not offset the effect of low rainfall for grain growers. Grain growers are highly susceptible to import competition, with imports making up 35.4% of domestic demand in 2021-22. This allows imports to fill gaps in supply, while changes to local production have little influence on price. As a result, adverse conditions contributed to significant declines in revenue over the two years through 2020-21, with the production of barley, oats and maize grain most affected in the 2020 season. Despite an expected increase in rain in the current year, revenue for the Grain Growing industry is anticipated to decline at an annualised 2.4% over the five years through 2021-22, to $522.3 million.
Government Support
In March 2020, the New Zealand Government (Te Kawanatanga o Aotearoa) announced funding of up to $95,000 for farmers and growers through the Rural Support Trust to provide ongoing recovery coordination and wellbeing support in response to drought conditions across much of the country. This financial support was extended until November 2021 due to continued adverse conditions. Conditions are forecast to improve from June 2021 onwards.
Future conditions
The droughts during 2020 and 2021 have been classified in the top 10 worst in New Zealand’s history. However, farmers and growers are likely to face harsher conditions in the future, with longer and stronger droughts forecast to occur more often as a result of climate change. According to the National Institute of Water and Atmospheric Research (Taihoro Nukurangi), New Zealand is likely to face drier winters and hotter summers, which would provide little recovery time between droughts for farmers and growers. Worsening weather conditions are also likely to affect other non-agricultural sectors. For example, droughts can significantly reduce dam storage levels, limiting power in regions that rely on hydro-electricity.
Climate change is projected to severely limit growth prospects for farmers and growers over the next five years. IBISWorld estimates revenue for the Grain Growing industry to grow at an annualised 1.5% over the next five years, severely limited by stronger weather extremes. The Kiwifruit and Berry Growing industry is also anticipated to be affected, although price increases are likely aid industry revenue, which is forecast to grow at an annualised 3.0% over the five years through 2026-27.
IBISWorld reports mentioned in this release:
