New Zealand has "heaps" of water, but the country is not good at using it efficiently, says Federated Farmers president Bruce Wills, as the country suffers one of the worst droughts in 70 years.
"We let most of it run out to sea in the winter, and the economy gets whacked, (by drought)" Wills said.
The farm sector is under immense pressure from the severe drought in the North Island, combined with an overvalued New Zealand dollar. But there is some offset from higher global dairy product prices, boosting farm incomes and countering a fall in milk volumes.
Government officials now believe the drought could carve as much as $2 billion out of the economy.
After selling off lots of stock because of the lack of grass and feed, farms were now like supermarkets with only half their shelves full.
"It is very hard to make money on that basis," Wills said and when they restocked it would be at higher prices than when they bailed out and sent stock off to the works.
"It will be a tough few years to go, the impact will go on for some time," Wills said.
There would be a "good number" of farmers making losses this year, but he hoped only a small number would be pushed to the wall and forced to sell up.
Fertiliser spending had already halted so trucks and planes were not moving and that meant a tough impact on provincial towns.
"Belts will be tightened and chequebooks put away," Wills said.
Some meat kill is running well ahead of the same time last year, with ewe and lamb kills up 20 per cent on last year and breeding cows up 70 per cent.
"There is a worrying number of hill country breeding cows and ewes sent to the works and that has a long-term influence on production next season," Wills said.
But for all drought-hit farmers: "If winter comes early it will be tough," Wills said. "A lot of farmers are still on a knife-edge and a lot will depend on what happens next month, if we get some more rain and more warmth.
"Drought is far from over when the rain comes; that's just the start of the recovery."
Farmers had to get through the latest drought, but plan better to get through similar future events, Wills said.
"We have massive potential in this country to sensibly and carefully irrigate vast areas of land," Wills said.
There were big-scale proposals to help make more parts of the country less prone to drought.
For example, the proposed $230 million Ruataniwha water storage scheme in Hawke's Bay is a dam and irrigation scheme. It is proposed a public-private scheme will build a dam west of Waipukurau that would hold 90 million cubic metres, capable of eventually irrigating 30,000 hectares. At present, just 6000 hectares of land in Hawkes Bay is irrigated.
"That's on a big scale to be more efficient, so there's lots we can do," Wills said, to lessen the impact of drought, including water storage, pasture management and different feed regimes and breeds that cope with drought.
The Ruataniwha scheme would build "sensible" resilience into the economy.
In South Canterbury, the Opuha dam irrigation schemes made the area "substantially" drought proof.
The Wairarapa Water Use Project plans to irrigate more than 60,000 hectares and fuel a boom in farming in the region. But the nine proposed reservoirs would also destroy 35 homes, sever roads and flood land, with local home owners concerned about the secretive process.
But Wills said water storage and irrigation had wider benefits.
"It is not just for farmers. It is for the entire economy," he said, with the 2008 drought costing the country $2.8 billion. Those costs could be mitigated far more than they are today.
Government studies of Opuha suggest that every 1000ha irrigated created 27 jobs and injects $7.7 million into the local economy. With 30 potential projects covering around 1 million ha up the eastern seaboard that's about $7.5 billion extra revenue for the country each year and 27,000 new jobs.
However, Wills says most farmers are good at responding to the signals of drought.
He changed the way he farmed dramatically after the last bad drought in 2007.
"This has been tough, but we have got through this drought much better than 2007, because we have done dramatic things," he said.
In 2007, his farm had 85 per cent sheep and the balance in cattle. This year he had 60 per cent cattle and just 40 per cent sheep. "We massively changed," he said.
Wills farms in hill country in Northern Hawke's Bay, but after the 2007 drought he built 60 new dams for stock water, which was a cheap way to store water.
"We learnt last time, when you run out of water, you run out of options," he said. "We get plenty of rain in the winter, just not enough in the summer".
In areas like the East Coast, farmers planned for drought "every year" so there was little evidence of farmers being caught short by having too much stock.
"None of us likes to see stock going hungry. When your back is to the wall and you have to dump stock at whatever (price) someone will give you, it is pretty uncomfortable," Wills said.
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