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The Government has declared a state of drought in the Buller and Grey Districts on the West Coast.
Primary Industries Minister Nathan Guy said the decision was made after a meeting in Greymouth where local farmers called for the move.
"The rain over the last week has not been enough to help these districts, and there is only limited rain forecast for the next two weeks," he said.
"It is very unusual for the West Coast to experience drought conditions and is not something that local farmers are used to. It shows just how extreme this dry period has been."
He had been in touch with the local Rural Support Trust and Federated Farmers to get a feel for the situation on the ground and he was concerned to hear of frosts this week - a sign winter was on its way, which will slow pasture recovery.
The decision means extra government funding will be available to the local Rural Support Trust and open the way to Rural Assistance Payments from Work and Income.
They are equivalent to the unemployment benefit and are available to those in extreme hardship.
"Farmers should contact their accountant or the IRD if they need help or flexibility with the timing of tax payments, and standard hardship assistance is available from Work and Income," Guy said.
The entire North Island remains in a state of drought.
Weather experts have heartbreaking news for farmers struggling to cope with drought throughout the country - no rain is likely for at least another 10 days.
However, National Institute of Water and Atmospheric Research (Niwa) scientists say long-term prospects - for the March to May period - are for near-normal rainfall.
Even that forecast is hedged with caution. Climate scientist Brett Mullan told a media conference that Niwa was not forecasting near-normal rain.
"But it is more likely. Think of it as a dartboard - if you are throwing a dart at it you are more likely to hit near-normal."
He described the drought, which covers almost all of the North Island and much of the South Island, as the "worst or equal worst in 70 years".
This was based on official records going back to 1972 and on data from isolated farms starting in the 1940s.
It was comparable in many regions to a severe 1946 drought.
Scientist Andrew Tait charted the progress of the drought from the start of year to a peak on March 16 in Northland, Auckland, Waikato and the eastern North Island.
Rain this week of 30 to 50 millimetres was only "a little bit of help".
"It will take heavy rainfall throughout March and April to get soil-moisture levels back to where they would normally be at this time of year," he said.
Rivers were also at record lows, Niwa said.
Hydrologist Roddy Henderson said river flows in 300 key catchments around New Zealand were in the bottom 10 per cent of all Februaries on record.
Such droughts were likely to become more frequent, chief climate scientist David Wratt said.
This year, high-pressure belts in the tropics had expanded further south than normal and this would become more common.
Work on the effect of rising greenhouse gas emissions showed a one-in-20-year drought would occur at least twice as often in the 2080s in parts of Otago, Canterbury, Marlborough, Wairarapa, Hawke's Bay, Bay of Plenty and Northland.
He said Niwa was working on improving its forecasting, looking up to two weeks ahead.