Tight times predicted for Bay's economy

By Lawrence Gullery | 21st November 2009

 Hawke's Bay's "lingering" drought, its 2009 cold winter conditions and the high kiwi dollar have contributed to a tight economic forecast for the region heading into next year.

The Bay's rural production sectors continued to be the backbone of the economy, accounting for about 40 per cent of total regional GDP.

But its economic performance relied on the weather, climate conditions and, at times, was at the mercy of international markets.

These details and more form part of a report commissioned by Hawke's Bay Chamber of Commerce to mark how the region's economy was travelling eachquarter.

The report said the ongoing effects of the 2007 drought had made times tough for pastoral farming although this year's spring had provided good conditions for stock production.

The cold 2009 winter impacted on the horticultural industry, the high kiwi dollar made it difficult for exporters while world competition in pipfruit is growing and the economic downturn also made it tough.

Sheep and beef cattle farming, fruit growing, vegetable production, forestry, fishing, grape growing, meat processing, fruit/wine and vegetable processing, textile and wood product processing was worth $2.1 billion to Hawke's Bay's economy.

Pastoral farming would have enjoyed a good spring this year but benefits were likely to be offset by the drought. The small dairy operations in Hawke's Bay were likely to benefit from Fonterra's milk solid payout.

The high dollar and hail damage in October this year handed the horticulture sector a 10-20 per cent reduction in export crop.

Vegetable growers in the Bay appear to be working in a stable market although a high dollar would impact on exports. Major processor McCains recently built a major $6 million cold store in the region.

In the wine industry, Hawke's Bay grape growers marked an increase in yields in 2008/09 but prices were down 10 per cent on the previous year.

The economic report said in 2009/10 the wine industry would continue to face issues such as high costs, high exchange rate and the national capped production yield.

"Positive short-term factors for the local red wine industry include the recent government funding for the promotion of the local red wine and the impending traditional summer wine tourism season," it said.

Statistics New Zealand figures used for the report said the Hawke's Bay wine industry employed about 1210 people.