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Doom and gloom report questioned

‘Let’s hope the Westpac economists are being pessimistic’.

The latest Westpac regional economic roundup indicates the Gisborne/Hawke's Bay regions will experience a severe recession over the coming year.

But that's not a view foresters currently share and farmers point to the far greater impact of drought in Hawke's Bay than in Tairawhiti.

The bank's economists said in their report, released last week, that while a recovery was in the offing, they thought it would be slower in Gisborne/Hawke's Bay than in most other regions.

“Mainly because of the regions exposure to agriculture and forestry,” the report said.

“Indeed, the outlook for Gisborne's forestry industry is not particularly good. Log prices have risen sharply in recent months but we doubt whether this can be maintained, especially given an expected global economic downturn and the likelihood of weaker activity in China.

“The region's sheep and beef farmers are also likely to face more challenging times, with prices set to fall in the coming year because of weak global economic conditions.

“That said, most farmers in the region should remain profitable, likewise the region's apple and grape growers, with the latter likely to be affected by weaker demand for wine in the key US and UK markets.”

NZ farmers ‘in better position to recover’ than other countries

Eastland Wood Council chief executive Kim Holland said the current situation was not quite as Westpac had painted it.

“Part of the problem is that they amalgamate the Hawke's Bay data with the Gisborne-Tairawhiti data.

“The forest industry bounced back once we were allowed to operate under Level 3, with initially a price increase per JASm3 of up to $50-56 in May compared to March.

“The majority of those who were let go prior to lockdown have been re-employed, with most contractors working at full capacity and recruiting,” she said.

“There are very few forestry workers who have been redeployed or on Job Seeker benefits.”

However, the log market was softening and the price had dropped over recent weeks, she said.

“Part of this is the usual yearly seasonal decline impacting on demand in China.

“We are expecting continuing impacts from Covid-19 on demand both into and out of China, particularly with Chinese exports to the US being more severely affected.

“For any primary commodity-based market we have to have resilience and be prepared to weather the storms, and hopefully everyone will be doing what they can to keep production and people working.”

She thought the headline to the Westpac report was worse than the contents of the story.

“The Gisborne-Tairawhiti region is benefiting from the Government-funded projects, with strong employment, sustainable work and a strong horticulture and agriculture sector.

“Forestry will weather the storm, and those who have been in the business a long time know that what goes down, goes back up.

“After all, the trees are still growing.

“Lets hope the Westpac economists are being pessimistic. I'm a glass-half-full kind of person.”

Federated Farmers provincial president Charlie Reynolds said he believed the bank's forecast was more accurate than most would give credit for.

“We are already starting to see some slowdown within forestry as forest owners are beginning to realise the impacts of the ETS and the carbon credit prices will have on their forests.

“The impacts of Covid on the world's agriculture sector will continue for a long time.

“However, New Zealand farmers are in a much better position to fully recover than other countries due to how we produce food and our production systems.

“The expectations of safe food by consumers will continue.”

Mr Reynolds said sheep and beef farmers were experiencing lower incomes as they saw the schedule for prime steers on par with bull beef, and the lamb schedule down 27 percent on last year due to the global decline of restaurant sales.

“Combine this with the recents changes to the Fresh Water Act and the Emissions Trading Scheme/Carbon policy and we could see severe reductions in farm productivity and incomes.

“It's a positive for Gisborne-Tairawhti that it was not anywhere near as badly affected by drought as Hawke's Bay.”