Media Statement 1 March 2004
Rebuilding help offered to rural communities

The Government is discussing with Federated Farmers and local authorities what help can be offered flood-stricken rural communities, Agriculture Minister Jim Sutton said today.

Mr Sutton made public a briefing from the Agriculture and Forestry Ministry that gives a preliminary estimate of flood damage of up to $180 million, spread across dairy, sheep, beef and deer, crops, and forestry sectors.

"This estimate is a preliminary one. MAF estimates that about 2600 farmers were affected by the storm of 15-18 February, but not all affected farmers have been able to be contacted yet, and many are still trying to evaluate the enormity of the damage to their farms."

It could be another four weeks before final information is available.

Mr Sutton said the flood had caused significant damage, washing away crops that were about to be harvested, covering dairy farms with silt, and seriously eroding hill country farms.

He said that MAF had estimated initial damage at up to $133 million. Medium term losses, covering production losses up to June 30 2004 for dairying and to June 30 2005 for sheep and beef, are estimated as another $47 million on top of that.

Dairying Immediate losses $32.7m
Dairying medium term losses $8.7m
Total Dairying $41.4m

Sheep beef and deer immediate losses $28.0m
Sheep beef and deer medium term losses $38.0m
Total Sheep and Beef $66.0m

Crop immediate losses $24m
Crop no medium term losses

Forestry $28-49m
Total $ 159-180m

Mr Sutton said the Government was committed to helping one of the most productive horticultural and agricultural regions to re-build.

"MAF staff and the agricultural recovery co-ordinators are working hard with Federated Farmers and other groups to quantify the effects of the flood and to identify rural community needs.

"The Prime Minister has promised that help will be given to farmers, growers, and others in the affected areas, stretching from South Taranaki and across to central Hawkes Bay down to the Wairarapa, Hutt City, and Marlborough. Officials are working with community groups on how best to provide that help."

So far, almost $900,000 has been provided to mayoral relief funds and local authorities to pay for upfront emergency costs.

Enhanced Taskforce Green programmes and Rural Sector Assistance funding has been allocated, and rural co-ordinators and agricultural recovery facilitators have been appointed.

Mr Sutton said he was impressed by the way so many people from all around New Zealand were responding to the plight of those in the flood-damaged area.

"It is at times like these that we know how lucky we are to be New Zealanders."

STORM DAMAGE ESTIMATES FOR THE AGRICULTURE SECTOR AS AT 27 FEBRUARY 2004.

This paper provides very early estimates of the damage to agriculture, cropping, forestry, and horticulture, from the storms of 15 ? 18 February. The estimates are based on a small sample of farmers who could be contacted immediately after the flooding. Further assessments are continuing. Because of the damage to communications and roads, it is likely that the data came from farmers, growers, and foresters, who were less affected. The cost of the damage is therefore likely to increase.

Background

The very early estimates of the short and medium term impacts on agriculture and forestry assessed to cost between $159m - $180m. This estimate includes all pastoral farming, arable, horticulture and forestry. Final data will be available in approximately 4 weeks time. Obtaining data is a huge task which is being led by a regional recovery reporting centre involving Federated Farmers, Massey University, local government, industry and Ministry of Agriculture and Forestry (MAF) personnel.

Nature of the Event

Significant flooding and soil erosion has occurred as a result of the storm which affected large parts of the Lower North Island on 15 and 16 February 2004. Strong South West winds damaged forests initially, followed by North West winds on 18 February.

The floods in the Manawatu/Rangitikei have been reported as being a 1 in a 100 year event. The magnitude of the losses both short and medium term are large and continue to be assessed as communications are re-established and the restorative phase begins. The estimates provided in this document are preliminary only, as not all farmers know the extent of the damage or costs yet.

Impact on Farming

The types of damage encountered include:

· Stock losses through drowning.

· Halts to milking and/or a halt to milk pickups by Fonterra, due to factory and/or road closure.

· Crop losses, directly as a result of flooding on crops or the inability to process crops.

· Loss of pasture off slipped hill country.

· Damage to plant and equipment, especially irrigation and water supply equipment.

· Damage to farm buildings including some homesteads.

· Silting and flood damage to pastures, fencing, water supplies, access tracks culverts, and farm bridges.

· Temporary loss of grazing due to severe silting of land.

· Permanent loss of grazing to newly formed riverbeds.

· Medium term loss of production, due to damage to pastures and silage reserves and delays in getting pastures re-established.

In addition, community infrastructure damage is having on-farm effects, for example, damage to roads preventing access to farms, and damage to community stock water supply schemes.

Unlike other adverse events such as a drought or hailstorm this event has resulted in significant on and off farm infrastructure damage. Infrastructure is more costly to restore and directly affects production capability.

Some farmers are suffering from stress and shock but the community effort to assist the worst affected farmers has been significant and helped to stem a severe drop in farmer morale.

Estimates of On Farm Damage

The estimates are broken down by sector, firstly taking into account short term losses such as drowned cows, dumped milk, spoilt crops and on-farm costs required to restore farm properties to a functioning production platform. Estimates are also provided for the medium term impacts (4 months for dairying, 16 months for sheep and beef).

Note only on farm losses and costs are considered. Factors such as the impact of road closures, black-out periods of no electricity supply and communications are not included, except where there are direct production losses as a result (e.g., loss of milk production due to an inability to milk cows or pick up milk).

Insurance on Farms and Forests

Typically farmers only have houses, buildings and plant insured. Some farmers have insurance extensions for natural disasters but not many, and for those who do, the limit of cover is typically for $20,000. Crops are insurable, but are not usually insured. Forests are not insured for wind damage.

Analysis by Sector

Background and Assumptions

A sector by sector approach has been taken to valuing the impact of the storms. A region by region approach has not been possible due to lack of information at this level. These sectors are Dairy, Sheep, Beef and Deer, Process Cropping (including vegetables) and Forestry. Horticultural losses are relatively small.

Further we have broken down the estimates of costs into immediate and medium term.

Immediate losses includes stock and crop losses, short term production losses (over the first week) and damage to property and structures that occurred in the first week.

The effects of the storm on farms and forests have been valued at the national level rather than at the farmer level, so insurance payouts and relief payments have not been taken into account. For example, the full impact of milk loss has been valued despite Fonterra paying farmers for the estimated amount of milk lost in the first 14 days (that is, Fonterra losses have been spread over all Fonterra suppliers). However an estimate of house loss and damage has not been included. In most cases these will be covered by insurance.

Medium term losses cover production losses up to June 30 2004 for dairying and to June 30 2005 for sheep and beef.

Forestry and crop loses are large.

In summary:

Dairying Immediate losses $32.7m

Dairying medium term losses $8.7m

Total Dairying $41.4m

Sheep beef and deer immediate losses $28.0m

Sheep beef and deer medium term losses $38.0m

Total Sheep and Beef $66.0m

Crop immediate losses $24m

Crop no medium term losses

Forestry $28-49m

Total $159-180m

Dairy Farms

Introduction

Dairy cow deaths from drowning were not as high as at first feared, with the final figure being 600-1000 for the areas affected.

The amount of "spilt milk" was higher than at first thought. On Tuesday 17th of February approximately 1600 herds either did not milk or had to spill milk away. This figure dropped to 800 on Wednesday and 400 on Thursday. Milk from about 70 herds was not picked up for several days.

For the meantime all cows have a home however temporary. About 20,000 cows were moved out of the area generally further north . This means that some farms further north will require extra feed for the extra cows trucked north. Feed supplies in the Waikato/Bay of Plenty are generally good.

Damage on dairy farms is in the form of silt deposits, fencing losses and damage to farm water supplies, some 60 dairy farms have had their ability to continue to produce severely compromised. A further 90 farms are badly damaged.

The areas covered by silt are large and there is debate about the correct method to use to get these areas reseeded and into production again.

Thirty per cent of Manawatu/Rangitikei dairy farms (approximately 1000) have silting damage.

Assumptions

It should be emphasised that the figures outlined below are early estimates only. Final data will be available in approximately four weeks.

Area of impact

The flood-affected dairy farms, stretching from South Taranaki (Waitotara Valley) throughout the Wanganui and Manawatu areas across into Tararua and the Wairarapa. Main areas of concern are:

· Whangaehu-Fordell

· Turakina

· Fielding

· Opiki/Shannon

· Moutoa

Information to hand from Fonterra indicates that some 111 farms were affected to some degree by flood damage, while 44 farms were not supplying milk (at 27 February 2004) ? either due to road damage preventing milk collection, or the sheds are so badly damaged that the cows cannot be milked.

It is estimated that a further approximately 1,400 farms were affected to some degree by milk not being able to be collected for between one and three days. Fonterra report that current milkflow through their factories, is down 600,000 litres/day on what could normally be expected.

Immediate cost of the flood

The following are preliminary estimates, based on the impact on the dairy farms over the remainder of the 2003/04 season.

Cost ($)

| Cost of lost production | 15.1m|

|Cost of lost stock | 0.5m|

|Cost of re-grassing | 3.6m|

|Cost of repairing farm infrastructure (fencing, tracks, | 6.3m| |water supply, other buildings) |

|Capital cost of repairs to dairy sheds | 3.8m|

|Cost of purchasing-in feed | 3.4m|

| Total Cost | $32.7m|

Fonterra have indicated that they will pay suppliers for lost production as a result of the flood, starting from when the flood first hit. Fonterra will estimate the production lost over the period, and pay the suppliers accordingly. This payment will be limited until the tanker calls at the farm for the second time, on the assumption that when it calls for the first time, most of the milk in the vat will be unusable, with an ultimate cut-off point of 14 days from the start of the flood. The MAF estimate of this is approximately $4m. While this will be a cost to the dairying industry as a whole, it will reduce the direct cost to the affected farmers, indicated above at $32.7m down to $28.7m.

In addition, a number of cows are being milked on other properties, including some herds that have been shifted to other regions, e.g. the Waikato.

Medium-term impact ? 2004/05 season

The carryover effects into the 2004/05 season will be very variable. Assuming re-seeding can take place reasonably soon, and fences, water supply, and access can be fixed up, (i.e, through March, early April) most farms would have reasonable feed cover going into the next season. The costings on the immediate impact noted above, also allow for the most seriously affected farms to buy-in feed to get them through the autumn period.

The preliminary assumptions used to estimate the impact for next season are:

· 100 farms will suffer a 10% drop in production, due to the effect of new pastures/general carryover impacts.

· Of the 30 farms estimated to have suffered particularly serious damage, half will resume production next season but suffer a 30% drop, while the remaining half will not come back into production until the following 2005/06 season.

The preliminary estimated cost of the lost production is $8.7m.

In reality, some farms will not be able to be brought back into production next season (2004/05) and are quite likely to drop out of dairy farming altogether and resort to some other land use. In this respect, the loss of production from these farms dropping out of the dairying industry is not included in the total.

Sheep and Beef Farms

Sheep and beef hill country has severely eroded especially in the area between Wanganui and Taihape and also the Waitotara valley, with some farms losing up to 30% of the grazable area. Based on estimates from the Regional Recovery Reporting Centre, Federated Farmers, Wrightsons and the Rural Relief Committees, it has been estimated that 1550 sheep and beef farms have been affected of the Southern North Island total of 4180 farms in the regions affected.

Previous studies have shown that pasture growth on slipped areas it can take up to 20 years to recover to 75% of it's previous production and may only ever recover to 80% of production. This ongoing loss of production from hill country farms has not been included in this analysis. As large areas have slipped this will be the largest long term production impact on sheep and beef farms. Although hill country erosion occurs frequently in response to storm events, anecdotally the level of erosion is up to 25% of the farm in some cases.

Preliminary Estimate of Immediate Losses

5,000 sheep drowned at $50 per head

$250,000

One hundred and fifty cattle drowned at $800 per head

$120,000

Forty deer were drowned at $400 per head

$16,000

Pasture reseeding costs 9,800 hectares at $350/hectare

$3,850,000

Fencing costs on 1550 affected farms

$15,500,000

Tracks Culverts etc on 1550 farms

$4,600,000

Other infrastructures and plant damage

$3,100,000

Total immediate losses approximately

$28,000,000

Estimated Medium term losses

On 1550 sheep and beef affected farms including lower stocking rates, lower lambing percentages, wool weights and cattle growth rates and business disruption $38,000,000

Total for sheep, beef and deer

$66,000,000

Cropping

Crops were at a vulnerable phase with all costs of production except harvesting, transporting and marketing having taken place. Reduced yields are expected on arable and vegetable crops in the Manawatu/Rangitikei and Wairarapa areas.

In the Manawatu/Rangitikei, process pea, potato, squash, fresh vegetable and onion crops have been lost and the yield of wheat and barley reduced in some cases.

In the Wairarapa, reductions in wheat, barley, field pea, potato and squash production are likely.

Preliminary estimates for total crop losses have been assessed at $24 million, mostly in the Manawatu/Rangitikei, with fewer losses in the Wairarapa and Hawke's Bay regions.

Forestry

Context

Since 1945 about 50,000 ha of plantation forest has been damaged by major storm events in New Zealand. The most significant events have been:

| 1964 | Canterbury | 5 200 hectares damaged|

| 1968 | Canterbury (Wahine Storm) | 1 000 hectares damaged|

|1975 |Canterbury | 11 000 hectares damaged|

|1982 |Central North Island (Cyclone | 6 300 hectares damaged| | |Bernie) |

|1988 |Central North Island (Cyclone | 19 000 hectares damaged| | |Bola) |

| 1988 | Northland (Cyclone Bola) | 1 500 hectares damaged|

With a provisional estimate of 5,000 - 10,000 hectares of forest damaged this storm has caused widespread damage when compared to these earlier major storms. This damage will result in immediate financial losses to forest owners also well as increased costs and longer term losses of timber volumes in forests.

Assumptions

The information has been collected by phoning key forest industry contacts in the Southern North Island and Hawkes Bay Regions.

To date 11 of the larger forest owners or managers in the regions have been contacted along with 2 significant logging contractor and 2 sawmill managers.

We have not been able to quantify damage to forest on farms at this stage.

Description of impacts

It is provisionally estimated that between 5 000 and 10 000 hectares of forest has been wind damaged in the South North Island region.

The area damaged and lost as reported by 24 February is about 4 100 hectares. Ernslaw One has about 3 000 hectares affected in the Santoft area. Horizons MW have about 500 hectares affected in their area of influence. Juken Nissho has about 150 hectares affected in the Wairarapa, including about 100 hectares of toppling. Wellington Regional Council (Upper Hutt) have reported about 20 hectares windthrow; there has been less significant windthrow in their Wairarapa forests. Winstone Pulp International has lost about 300 to 400 hectares at Waimarino. They will salvage what they can reach from existing roads.

Extensive damage to forest roads and bridges/culverts has been reported by each company contacted. For instance WRC in Wairarapa has lost 4.5 km of logging road recently completed. In the area overall more damage will be found when access is possible.

Ernslaw One has reported that about 500 hectares of forest in the south of their Santoft Forest have been flooded by the Rangitikei River.

The preliminary costs of damage

The preliminary estimate for the value of damage to the trees in these forests is between $28.2 and $49 million. This does not include the significant costs of repairing roads, bridges, fences and other in forest infrastructure.

The forest road reconstruction and repair bill will be large. Forest companies generally construct the roads in these areas at least 12 months ahead of their use to allow them to "settle" and dry out properly. This will not be possible if salvage is to be attempted. Many of the County roads which provide the primary access to forests are low priority for the Councils to fix. Some areas are now accessible to 4WD vehicles but not 40 tonne logging trucks.

Salvage operations from mature wind thrown forest areas will be possible. The salvage logging required is slower and more expensive than conventional logging in the same area because of the way that trees have fallen. It is also more dangerous.

Some sawmills have had difficulty with log supply, for example Eurocell sawmill in Upper Hutt has had 5 days without logs.

Other long term impacts relate to forest health issues with an increase in bark beetle population & sapstain affecting the time window available for salvage logging (generally regarded as about 6 weeks but depending on the weather).

Where areas cannot be salvaged, that area will be non-productive until the next rotation begins.

Some damaged woodlots are either managed for superannuation schemes, or are intended as someone's super scheme. The long-term effect on perceptions of forestry as an investment will be affected.

There has been no separate assessment of the loss of "Kyoto" forests, but a number of respondents reported that their 10 ? 12 year old forests that had just had their final thinning operation were badly affected by the winds.

Damage to fences has been widespread.

Social impacts include silvicultural contract crews unable to work because they have not been able to access their allocated blocks. There is a similar situation for some harvesting crews working in hauler areas. The situation is more difficult for them as they have significant loan repayments to finance for the capital-intensive harvesting equipment.

Standard Relief Measures for the Agricultural Sector

The basis of the agricultural recovery programme is through the provision and payment of Agricultural Recovery Facilitators to facilitate the response (including the elements below) at a district level and coordinate with one another (contracted by MAF and funded through Vote Agriculture):

· Enhanced Task Force Green administered by MSD (Work and Income).

· Technical Advice Programme either in written form and or at Field days (funded through Vote Agriculture).

· Rural Support Co-ordinators (employed by local Rural Support Trusts) who provide personal and financial counselling and assist with applications for Rural Sector Assistance (50% funded through Vote Agriculture).

· Rural Sector Assistance administered by MSD (Work and Income).

Rural Sector Response

The policy response for the rural sector is designed to address the concerns of people, regional infrastructure and on-farm recovery.

Agricultural Recovery Facilitators are the main means by which the agricultural recovery programme is being facilitated. Co-ordinators are contracted by MAF to:

· co-ordinate the effective matching of supply of services (including inter alia labour equipment, technical advice services and donated materials) to priority demand, and · monitor and report on recovery programmes and issues arising.

Donations of money and material from business groups and community have been significant and a good proportion of these donations are targeted to rural people.

People Needs

For some farming families this event is extreme in its impact on people, farm business viability, and their futures.

The recovery prospects are daunting. Trauma and stress are manifesting. Personal and business decision making is compromised.

Personal and financial counselling is needed. For some, failing farm businesses will not provide essential living needs.

The government response is through:

i) MSD (Work and Income) through Rural Sector Assistance Programmes for farming families.

ii) Rural Support Co-ordinators (employed by local Rural Support Trusts) who provide personal and financial counselling and assist with applications for Rural Sector Assistance (50% funded through Vote Agriculture).

iii) MSD (Work and Income) through provision of additional professional counsellors.

Regional Infrastructure Needs

Significant damage to roading, communications, power and flood protection infrastructure requires reparation to restore an infrastructure capable of supporting farming operations. The relevant agencies are addressing this.

On-Farm Needs

Labour and equipment are vital to both clean up and recovery of farm businesses: notably, debris removal, fence clearing and re-erection, drain and culvert clearing, repairs to stock water systems, repairs to tracks and bridges, and other general on-farm infrastructures. Federated Farmers have received many offers of assistance to help clear fences, farm access, and assist with the clean up effort. Assistance is needed for the deployment and management of labour to the adversely affected farms and areas, and for administrative support pertaining to transport, accommodation, feeding, and issues including health and safety requirements for these people.

These needs are being addressed through MSD (Work and Income)'s Enhanced Task Force Green Programme.

Heavy machinery is required for clearing farm tracks and roads. There are concerns regarding the availability of the machinery and obtaining access to some sites. This issue is best addressed at the local level.

Technical advice is required since the application of optimal husbandry and farm management practices for effective recovery of damage to farms caused through silt and slip damage is vital. Current understanding is variable. Management decisions around re-seeding, fertiliser application, and grazing management are critical. There is an urgent need for publicly available information. A Technical Advice Programme utilising consultants to prepare and distribute technical advice material, provide shed meetings, newspaper articles and advertise the availability of the service is being prepared.

Further Report

Damage and loss assessment is continuing. Final data is not expected before late March. Further updates will go on the MAF website as available.

ENDS

© Scoop Media