Friday, March 29, 2024

Dairy woes hit rural confidence

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Stronger real estate, diverse agriculture and growing tourism have generally pushed provincial North Island confidence ahead of the South Island.
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But at least one pocket of Canterbury has bucked the trend.

The Westpac McDermott Miller regional economic confidence survey showed regional confidence plunged in the March quarter, with pessimism driven by the economic impact of weak dairy prices.

Westpac regional industry economist David Norman said the downturn had been expected but was a little bigger than anticipated in non-dairy centred regions.

Westpac divides the country into 11 regions and all but Hawke’s Bay-Gisborne recorded falls in optimism.

Regional confidence was largely dragged down by dairy woes but strength in meat, wool and horticulture offset some of the pessimism, Norman said.

Local Government NZ chairman and Hastings mayor Lawrence Yule said confidence was generally a lot higher in the non-dairy areas of the North Island

Significant interest in real estate had pushed that confidence, he said.

Horticulture was growing and tourism and real estate were flowing into provincial regions.

In Hawke’s Bay the pipfruit sector was on fire, the beef sector was booming and the sheep industry remained relatively stable, Yule said.

“There’s increased confidence, increased plantings and lot of infrastructure going on with that.”

The buoyancy in the Auckland property market had sparked a lot of people to sell their homes and buy property in Hawke’s Bay.

“Real estate has not been like it for years in Hawke’s Bay. That translates to a lot of confidence in the community,” Yule said.

“We have been a little bamboozled with the dairy. Certainly that plays a big part but this district is not all about dairy.”

Bob McDonald

Retailer

But it was a different story in much of the South Island.

The South Island, being more predominantly dairy, was going through some very difficult times, he said.

“There is a level of caution for many and a lot of stress flows through to discretionary spending and businesses in the small towns that have not got the flow-on effect of the Auckland property market.

“In the south there are lots just toughing it out. Certainly, there is a dent in confidence in the economy in Southland, Otago and much of Canterbury,” Yule said.

But Ashburton District appeared to be bucking the South Island trend.

Ashburton mayor and Methven farmer Angus McKay was confident his district would fare better than most provinces.

There was a diverse range of agriculture in the district, tourism was booming and new industry was springing up, he said.

“Yes, the downturn will have an effect on the Ashburton town – that will be challenging because of the high dairy price we have come from but we are very diverse in our farming, the building and construction industry is growing and we have tourism going through the roof, literally,” McKay said.

The Canterbury mayoral forum last year put together a regional development programme aimed at attracting new skills and new tourism ventures.

“This was the region proactively working ahead and as a district we are reaping positive outcomes from that now,” McKay said.

Ashburton businessman Bob McDonald echoed the confidence.

He has been 27 years in the health food retail business in Ashburton’s central business district.

“Actually, we are going all right, we have been through tougher spells – there are some grizzles and grumps but generally the mood among local retailers is positive,” he said.

“We have been a little bamboozled with the dairy. Certainly that plays a big part but this district is not all about dairy,” McDonald said.

Retail had progressively got tougher and tougher as it competed with online shopping and that competition had got more aggressive over the past five years.

“So, irrespective of any rural downturn, retailing has trimmed down anyway,” he said.

Customers appeared more cautious when it came to spending on clothes.

Ashburton’s women’s and men’s wear business owner Tony Todd said while people were still buying, trade had definitely tempered down.

He had seen many changes in buying trends in his 50 years in fashion retail in Ashburton.

“And we have to cut the cloth in reaction to change and now where we might have thought we would stock something to give it a go, we are buying in what we know will sell.

“It’s probably more a case of customers buying an item of clothing to go with something they have in their wardrobe rather than buying the complete new outfit.

“But that’s business. It’s always changing and I have seen a lot of ups and downs over the times. That’s part of business when you have been in it for a long time,” Todd said.

Waimate mayor and jewellery retailer Craig Cowley said the flow-on effects of the dairy downturn were impacting right across the district.

“It’s not just rural business. Flow-on is hitting everyone.

“Retail is very quiet, it’s definitely showing the money is not out there – people are tightening their belts but we are still selling the odd engagement ring,” he said.

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