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• Climate

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CHAPTER 2 - Socio-Economic and Climatic Overview

Between 1978 and 1990, the time series for which the data in this report is presented, South Canterbury farmers were operating in an environment of considerable change.

• There were three major drought events (1981/82, 1984/85 and 1988).
• The New Zealand economy was restructured after the Labour Government was elected in 1984. Over the period 1984 - 1990 this restructuring impacted on the farming sector particularly severely.
• As a result of major economic restructuring farmers were faced with significant changes to prices received for outputs (1amb in particular) and to interest rates on historical debt Rural Bank loans) and current account debt.

This chapter presents an overview of the socio-economic and climatic environment in which South Canterbury farmers had to operate.

Climate

Figure 2.1 (lick on box at right for full imgae)shows the quarterly rainfall data recorded at Timaru airport for the period. For some of the data set observations were not available from Timaru airport and for these periods Timaru harbour observations have been substituted in the series.

The graph shows the low rainfall periods in 1980-82, 1984/85 and 1987/88.

The following table shows the rainfall (annually and quarterly) for the two latter dry periods compared to the average rainfall over the same periods for the data series.

	Mean for period (79-90) millimetres	1984/85		1987/88		1988
Period		Actual mm	Actual as % of Mean	Actual mm	Actual as % of Mean	Actual mm	Actual as % of Mean
Annual	550.5	329.0	59.8%	396.0	71.9%
July - September	1052	78.0	74.1%	73.0	69.4%	43 0	40.9%
October-December	1461	115.0	78.7%	113.0	77.3%	920	63.0%
January-March	1601	80.0	50.0%	130.0	81.2%
April-June	139.1	56.0	40.3%	80.0	57.55%

In addition, both the years 1988/89 and 1989/90 were dry with 444.6 mm and 447.4 mm annual rainfall (80% of the mean for the series). The combination of these four years of very low rainfall reduced the mean for the series; consequently the droughts were more severe than is indicted by the results for the series. The long term (30 years) average for Timaru airport is 575 mm.

Prices

Consumer Price Index (CPI):

Figure 2.2 (Click box to right) shows the large change in CPI from 1979 - 1990. This simply shows that in 1990 it took approximately 900 c to buy what cost approximately 300c in 1979.

Wool Price (c/kg greasy) (1990 dollars)

	Time Period	Mean	CV
	Pre 1984	634.7	18%
	1984 - 1987	543.7	9%
	Post 1987	507.4	8%
	Overall	572.5	18%

Lamb: Figure 2.4 (Click box to right) shows price for lamb (1979 - 1990) in cents per kilogram exclusive of wool pull and pelt payments. Prices are expressed in 1990 dollar values as well as in nominal terms. The series shows that in 1990 lamb had recovered to 62.4% of its average value in 1990 dollar terms between 1979 - 1981 and that the lowest prices were received between 1986 - 1988.

In real terms prices were as follows (1990 dollars):

	1979-81	256.4 c/kg
	1986-88	69.9 c/kg
	1990	155.8 c/kg

Between 1986 -1988, lamb meat prices were 27.3% of the value of lamb from 1979 - 1981 in real terms. To correspond to tables presented later in this report the following were the lamb prices (mean and coefficient of variation for the period) for three other periods of the series (1990 dollars).

Lamb Price (c/kg exclusive of wool and pelts) 1990 dollars

	Time Period	Mean	CV
	Pre 1984	265.5	7%
	1984 - 1987		57%
	Post 1987	102.01	44%
	Overall	189.5	50%

Mutton:

Figure 2.5 (below right) shows prices for mutton (1979 -exclusive of wool and pelt payments. Prices are expressed in 1990 dollar values as well as in nominal terms.

The series shows that prices in nominal terms (actual cents/kg) remained constant between 1979 and 1985 at around 38 c/kg. In real terms this price was 87 c/kg (1990 dollars).

Prices in nominal and in real terms then dropped markedly and were negative; during this period many farmers killed ewes and wethers on-farm because they were not worth the freight to the works. This situation continued until 1990 when prices lifted to 40 c/kg.

Consistent with later sections of the report the prices for mutton are presented for the following periods.

Mutton Price (c/kg) (1990 dollars)

	Time Period	Mean	CV
	Pre 1984	95.4	15%
	1984 - 1987	29.9	133%
	Post 1987	18.2	92%
	Overall	54.3	85%

 

Beef: Figure 2.6 (box at right) shows prices for all beef (1979 - 1990) in cents per kilogram. Prices are expressed in 1990 dollar values as well as in nominal terms.

The series shows that beef prices have varied, in real terms, quite significantly. The mean price over the 12 year period has been 286.6 c/kg with a range between 192.8 c/kg and 367.3 c/kg (1990 dollar values). The coefficient of variation over the period was 20% which is about the same as for wool (18%) but significantly less than for lamb (CV = 50%) and mutton (CV = 85%).

Prices in nominal (actual) terms have increased over the period. Prices peaked in real terms in 1984/85 at 367.8 c/kg; this was also a drought year in South Canterbury.

In 1990 beef price was 280.9 c/kg compared to the high of 367.8 c/kg in 1984/85 and 343.1 c/kg in 1978/79.

The following table shows beef prices for the periods referred to in later sections of this report.

All Beef Price (c/kg) (1990 dollars)

	Time Period	Mean	CV
	Pre 1984	314.3	9%
	1984 - 1987	286.5	23%
	Post 1987	240.4	16%
	Overall	286.6	20%

Contact for Enquiries

Senior Policy Analyst
Natural Resources Group
Christchurch

Phone: 03 943 1705
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