Support for farmers and growers following severe weather, government inquiry announced

Minister Kieran McAnulty and Tukituki MP Anna Lorck.
Photo: RNZ / Lauren Crimp

Farmers, growers and other businesses affected by recent weather events will receive help to secure cheaper loans, rather than be given cash, the government has announced.

Hawke’s Bay Growers previously asked for $750 million to cover costs created by Cyclone Gabrielle.

Emergency Management Minister Kieran McAnulty made the announcement on Thursday at Taylor Corp Packhouse in Waiohiki, Hawke’s Bay.

Two schemes have been designed to allow banks to support farmers and growers.

The first, called the North Island Weather Events (NIWE) Loan Guarantee Scheme, would support banks to grant loans up to $10 million over five years, with a guarantee of 80 percent by the government, giving lenders confidence to lend with more favourable terms.

The government said businesses with an average amount of debt could save between $45,000 and $225,000.

It should be up and running by the end of July and would be available to all businesses who met the criteria, not just growers and farmers.

For businesses unable to get loans from banks, the government itself would lend them the money, under a scheme called the NIWE Primary Producer Finance Scheme but this would only be available to land-based businesses.

“We’re encouraging people to go to their banks in the first instance, but if that doesn’t work out, the government will offer concessionary loans with deferred interest over 10 years, up to $4 million, with the possibility of going higher depending on circumstances.”

McAnulty said this meant smaller operators, for whom recovery might take years, would not be saddled with repayments until they were making money again.

There had been up to $240 million put aside for this scheme.

“It will provide a way for businesses to fully re-engage with lenders at a later date, once we have helped them get back on their feet,” McAnulty said.

To be eligible, a business must have had insurance, have lost 30 percent or more of its uninsurable productive capacity because of the weather events, and be able to show it has a reasonable prospect of returning to being a viable business.

It must also have sought and failed to receive lending from commercial lenders. A firm would not be immediately eligible for support if it has simply received less financing that it desires from its commercial lender.

Horticulture New Zealand worked with the government on designing the scheme. Chief executive Nadine Tunley said many businesses were still grappling with funding repairs and rebuild efforts, and she hoped this would relieve the pressure.

“I think it’s a good package that will enable businesses to build back, and that is what they’ve been looking for.”

Giving businesses cash wouldn’t have been an effective option, she said.

“Post the 2004 Manawatū floods, the government implemented a policy, because it had cost the country significantly. That policy caps any payment to any single property to $250,000.”

With many properties bigger than 40 hectares, that wouldn’t have been enough to make meaningful change.

“Growers now know this is it, and we move on – whatever that might look like.”

LeaderBrand’s chief executive Richard Burke welcomed the package.

“Businesses like ours provide hundreds of thousands of jobs for people in the regions.

Minister of Finance and Cyclone Recovery Grant Robertson said the government wasn’t able to pay the full cost of the recovery.

“This package has been carefully designed to ensure banks continue to play an integral role in the recovery,” Robertson said.

It comes on top of $2 billion committed so far – $74m in grants to farmers and growers, $1 billion flood and cyclone recovery package as part of Budget 2023, and $6 billion committed for a national resilience plan to focus on “building back better”.

LeaderBrand’s chief executive Richard Burke welcomed the package.

“Businesses like ours provide hundreds of thousands of jobs for people in the regions.”

Hawke’s Bay Federated Farmers president Jim Galloway said being able to secure a solid loan will be a game changer for many.

“Without a loan and without cash-flow and money, you’re business can’t operate. So being able to access money to carry you through and finish those repairs, or get your farm back in an operable state, it won’t be perfect but it might be operational, that is just absolutely key to being able to go forward.”

Galloway said farmers who suffered damage during the cyclone have repair bills in the hundreds of thousands of dollars.

Minister of Finance and Cyclone Recovery Grant Robertson said the government was not able to pay the full cost of the recovery.

“This package has been carefully designed to ensure banks continue to play an integral role in the recovery,” he said.

It comes on top of $2 billion committed so far – $74m in grants to farmers and growers, $1b flood and cyclone recovery package as part of Budget 2023, and $6b committed for a national resilience plan to focus on “building back better”.

Growers say support too little, too late for some

Aside from cash, growers had been desperate for certainty – and finally got it.

But while the loan schemes brought some relief, frustration lingered because it had come so late.

New Zealand Apples and Pears chair Richard Punter said that was unacceptable.

“Waiting for months to find out what’s gonna happen puts you well behind the eight-ball when you’re trying to do something in the orchard.

“If you mix all those things up, and the mental stress of having maybe lost your home, and all your possessions, as well as your orchard, and still being confronted by mountains of silt and trees, it’s a bit of an uphill battle to convince the growers right now that this is a good thing.”

Punter said it was a challenge to get the government to understand how urgently it was needed.

Cameron Taylor from Taylor Corp said while cash would have been ideal, he had not been holding his breath the government would stump up.

He was most worried about mum-and-dad orchardists, and those who were older and could not afford to get into more debt.

Brydon Nisbet
Photo: RNZ / Maja Burry

“Loans are suffocating, aren’t they, that’s why people buy Lotto tickets don’t they?

“When you’re in your mid-to-late sixties, more loan, more debt, what are you gonna pass on?

“And it wasn’t their fault, it was actually infrastructure failure in a lot of places, they just pulled out the short straw.”

Hawke’s Bay Fruitgrowers Association president Brydon Nisbet said some smaller growers would now be facing closure – but that could have been avoided if a grant option was included.

“I would’ve liked to have seen still grants, and even if it was on a case-by-case basis, of how badly they were hit and how badly they need to build back, a certain grant for so much per hectare just as a kickstart to help them.”

Nisbet said he was relieved growers finally had surety and could start making decisions about the future of their businesses, however, he was disappointed it had taken so long.

Government inquiry into response announced

Cabinet has decided to establish a government inquiry under the Inquiries Act 2013 to review the response to the severe weather.

McAnulty said it was “normal practice for local Civil Defence to review the response to a severe weather event, regardless of size”.

“Given the significance of Hale, Auckland floods and Gabrielle, it is appropriate that a government inquiry is set up. It will be led by former Governor-General Sir Jerry Mateparae.”

He said affected communities, including rural, Māori and Pacific communities, had raised concerns about communication and support during the response.

“There are lessons to be learned. It is important we incorporate these into our systems so we can continue to improve.”

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