[As published in March/April BayBuzz magazine.]
Twelve months on from the cyclone, BayBuzz takes a look at some of our key sectors – how they are doing, and the challenges faced.
Tourism
Tourism is the number three industry earner for Hawke’s Bay, accounting for one in ten jobs, and prior to the cyclone generating $1.3 billion in direct and indirect value.
The cyclone led to massive cancellations across accommodation, attractions and activities. One month of cruise visitors was lost, equivalent to 16% of the season and around $5 million, says Hawke’s Bay Tourism CEO Hamish Saxton.
“Tourism is a really important industry. With the right messaging and the right marketing and the right work it is also an industry that is able to be turned around with reasonable speed,” says Saxton.
To rebuild the visitor economy, Hawke’s Bay Tourism submitted a $2.3 million (over three years) funding request to Government, eventually securing $1 million. The money will be used to shore up the high season summer visitor market, something that was never necessary before.
Speaking to BayBuzz in late January Saxton says the sector has bounced back. “With a little bit of caution. We’ve had significant days of what would be termed normal trading days at pre-Covid levels.”
Good weather, and great events over summer, as well the Ardern-Gayford wedding at Craggy Range are helping to remind people about Hawke’s Bay as a summer destination. Hospo staff shortages have been a problem, but these are now coming back.
Saxton warns that two or three months of good summer trading “does not a summer make – we want to see those patterns continue through”. He notes that traveller booking behaviours have changed.
“We’ve seen a lot more last minute bookings, and traveller spending is a reflection of the economy; it is not what it was.
“When you have a high reliance on domestic visitors, who don’t have as much money in their pocket, then they’re potentially going to be making more conservative decisions. Hawke’s Bay is lucky that we generally have fantastic weather and lots of great events to entice return visits.”
Becoming one of the great wine capitals of the world, elevates and confirms Hawke’s Bay’s positioning as food and wine country, he says.
“Achieving global status as a great wine capital helps us on both the domestic and international fronts.”
Saxton says there is desire to grow tourism. “The biggest barrier to growing the visitor economy is accessibility. We could do with even more air travel capacity coming into Hawke’s Bay, especially from Auckland, and State Highway 5 continues to be problematic.”
Viticulture
Grape vines are a robust and resilient plant. Of the primary industries, viticulture appears to be the least affected, with just a small part of the vineyard estate lost.
“The most affected areas were Esk Valley, Dartmoor, Puketapu, and Ōmarunui, with devastating impacts for individual businesses that experienced total loss – home, vineyard and business,” says Brent Linn, Executive Officer, Hawke’s Bay Winegrowers.
“Some are still hurting.”
With vintage 2024 just weeks away, expectations are that harvest will be a bit down on the 40,000 tonnes that’s normally produced.
Although El Nino has presented better growing conditions, the crop is lighter than normal due to inclement weather in November, says Linn.
“It’s a bit down, but not dramatically. It’s not a train wreck by any means. That’s the variability that exists in our business every year, depending on what’s happening in flowering. You roll with it.”
The slowing international market is a challenge for the industry overall, with pressure coming on prices due to cost of living issues.
Yet Linn notes that some growers are rapidly expanding their exports to Australia and the US.
He says external factors pose the most risk.
“Compliance, input cost increases, the cost of living crisis. They’re not things we can control, and are implicit in a lot of primary production businesses.
“Our focus is on the premiumisation of our wines. We’re a small wine growing region at the bottom of the world. We’re focussed on value, not volume.”
Pipfruit
Apple growers were hammered by the cyclone, which hit just before the harvest of Royal Gala, the first variety to be picked.
Karen Morrish, CEO of New Zealand Apples and Pears, says that 610 hectares of orchards – around 10% of total plantings by acreage – were forcibly removed by the cyclone.
“Fifty per cent of the crop was lost, with some people losing everything, including their house.”
The costs to regenerate orchards (infrastructure and trees) can be up to $150,000 per hectare. Money has trickled through to growers, but it hasn’t been enough, with growers shouldering the majority of costs themselves, often through borrowing. Moreover, by the time harvest 2024 comes around, some growers will have been without income for two years.
The combination of loss of production (now and several years into the future), loss of current cash flow, cost of re-establishment, and rising debt (with rising interest rates) is pushing even some of the biggest corporate growers to the edge.
And yet other growers escaped the cyclone totally unscathed.
For those who were flooded, but left with trees in the ground, the big remaining question: Will the trees survive?
Rockit apple grower and President of Hawke’s Bay Fruit Growers Brydon Nesbit had two of his three blocks affected by the cyclone. One, adjacent to a failed stop bank was lost completely. The other, a few hundred metres away survived under 400mm of silt across the five hectare site.
Clearing the silt was akin to an act of faith, for Nesbit.
“When we first started cleaning the block it wasn’t even in my mind to save the crop because I thought that was impossible. I had to get the silt out, because the reports were that it would damage the roots and the trees would eventually die.
“I wouldn’t know until spring whether the trees would survive, and the clean-up has been massive. I’ve lost very few trees. I think everyone is really surprised at the resilience of the people, who got in there and saved their orchards, and the resilience of the land,” Nesbit says.
Karen Morrish says that Hawke’s Bay’s apple harvest is predicted to be at pre-cyclone levels. New plantings and swapping out older varieties for heavier croppers – planted several years ago and now coming onstream – have compensated for the ground lost to the cyclone.
“It’s a heck of a bounce back, and very nicely surprising. There’s a level of optimism that we weren’t expecting. But it’s said with an air of caution.
“We’re going into harvest actually optimistic. But I think the last three years in particular have taught us that you never know what’s around the corner,” Morrish says.
Beef and lamb
Damage to land, farm infrastructure, and access were the main impacts of the cyclone on our sheep and beef farmers. Beef and Lamb New Zealand (B+LNZ) estimate that 990 farms on the East Coast, Tararua, Hawke’s Bay and Wairarapa suffered damage, in the range of $336-$385 million, with most costs uninsurable.
Analysis prepared by B+LNZ in May 2023 noted the impact on farmers was: “multifaceted ranging from immediate concerns such as livestock welfare and infrastructure damage, to longer term implications that encompass land management and financial stability.”
The report called for more government investment to support the rapid recovery of sheep and beef businesses, and warned of impacts spreading into rural communities and the ecosystem of businesses that support farmers.
Nearly 12 months on, access within farms and to farms is still an issue, says HB-based Mark Harris, Extension Manager Beef + Lamb New Zealand. “Access is still fragile for some farmers and roading is still a nightmare,” he says.
The B+LNZ report notes that: “Farmers continue to emphasise robust rural roading infrastructure as an urgent investment priority for central and regional government.”
Harris says the “kind” spring came as a relief for farmers after a dry August, but he notes that rising costs and decreasing commodity prices mean that in some cases farmers are raising their animals at a loss.
B+LNZ’s lamb crop report (December ’23) showed a 6.6% increase in the East Coast’s ewe lambing percentage, with more twins and multiple births this year.
The same report says farmer sentiment remains mixed due to significant cyclone recovery work, poor economic returns expected, and high farm expenses, noting that farmers are challenged this season with a collision of prices, expenses and regulations.
The top two inches
It wasn’t just the land that took a hammering, rural people were badly scarred too.
Jonathan Bell, Hawke’s Bay co-ordinator for the East Coast Rural Support Trust (RST) an MPI-funded organisation that supports rural communities, says there were issues affecting rural community mental wellbeing before the cyclone.
He’s referring to the pandemic, drought, rain, regulatory load, interest rates, the highest on-farm inflation in more than 40 years, and labour shortages.
The cyclone has added an extra layer of complexity, he says.
“It was highly traumatic, and spiked demand for our services. It’s going to cost people a lot financially. Unfortunately some people lost their lives, and that’s absolutely tragic.”
Nearly 12 months on, demand for RST services is declining, but remains above pre-Gabrielle levels, says Bell.
“In January we had eight people reach out for help; three were cyclone affected who had finally hit the wall. Support also continues for those going through the buyout process.
“The mental health effects vary. Some people are not handling it well, and others are barrelling on and doing a great job. It comes down to the individual. Some people have the ability to handle the event, and others don’t. With some people the issues manifest very quickly and they need help immediately. Others take time. We believe that we will still have people popping up (for help) in the next two to three years.”
He says that farm infrastructure will take years to fix, and for some parts of the community financial recovery could take 15 years.
He warns of an approaching pinch point, at the end of the summer holidays.
“We’ll have gone through weaning and selling stock to the works or store. Guys have been doing work on their farms, they’ve had their Christmas holiday and the kids are going back to school. They’ll be at a point where suddenly all of the distractions have stopped, and they’re back to recovering the farm and dealing with all the issues.
“I think we’ll probably see people popping up in February and March.”
Bell says the key is that things will get better. “The land will heal itself, the bridges will be fixed, tracks will be replaced, fences can be replaced, and interest rates won’t stay high forever, and hopefully the compliance side of things will be more pragmatic and practical.
“And as things get better the people will heal as well.”
Small business
The going is still tough for small business operators, says Karla Lee, CEO of Hawke’s Bay Chamber of Commerce.
Last year in reviewing the Hawke’s Bay labour market BayBuzz reported on a broken system, and businesses on the edge financially.
“Everyone’s in survival mode,” says Lee.
The Chamber made the case for additional funding, securing $1.5 million late last year to support cyclone affected businesses through the Regional Business Partners scheme.
2024 will be about rebuilding local business capability, with the additional funding potentially helping a significant number of small businesses. Lee says support will be tailored to business needs, centring on things like wellbeing, financial resilience, and marketing.
“It has been really difficult for them. They have to build their clientele back up again. There are some obvious gaps – marketing, staffing, recruitment and training. I can see staffing being a problem for many years to come.”
The influx of workers expected into the region (and their spending) when the major infrastructure projects get underway will be a boost for the local economy.
Lee says: “We all need each other on some level. Keep everything going by supporting each other in business. It could be by going to a restaurant, or using a service within Hawke’s Bay. We’re in an ecosystem; let’s help each other. Use your money wisely and support local.”
Infrastructure
Geotech specialist Cam Wylie, Managing Director of RDCL and Co-chair of Hawke’s Bay Engineering Leadership Group says New Zealand’s infrastructure is extremely weak.
“The cyclone showed that we’re in no shape to deal with an extremely large event. Hawke’s Bay is a place that needs to be able to recover. We need infrastructure that’s going to survive.”
For our infrastructure rebuild, the design, construction, and thinking around the environment and future needs has to be exceptionally good, he says.
Wylie says the past 12 months have been about triage work, a lot of information gathering and understanding of what the demand is. “And I think it’s been pretty well done.”
Regional Recovery Agency (RRA) CEO Ross McLeod says that good progress has been made – referencing funding for property buyouts, local roading, and rebuild for the flood protection network.
“But then we look ahead to the amount of work that’s still to be done; about $250 million of road repairs to the local network that was funded through the agreement signed in the middle of last year. There’s probably close to another billion dollars of local road repairs to be done, and that’s probably going to take 10 years.”
McLeod says if Hawke’s Bay tries to do all of its rebuild work at once it will blow up the labour and materials market. “We’re working out how we can work together across the different agencies, and phase that work and sequence it so it’s logical, that it can be funded, and delivered.”
RRA Chair Blair O’Keeffe says more evaluation work is required to get to a resilient state. “One of the ultimate objectives for us as a region is to ensure we’re in a better place to deal with future events, but also to point out that we want a resilient and successful economy.”
McLeod says Hawke’s Bay has had good support from the previous and current governments, with the new government “making every signal that they’re going to be a good supportive partner of the region and recovery”, but cautioning that the support “might not meet everybody’s individual desires”.
O’Keeffe says that one of the biggest risks facing the region is that industry doesn’t rebound.
“The most critical thing for the region is confidence,” he says. “The funding won’t come without confidence. Confidence is absolutely critical , and I think there are grounds for us to have confidence. It doesn’t mean it’s not going to be hard for us to achieve what we want to achieve. It will drive private investment, crown investment, and allow councils to plan for their future as well. Everything flows from that.”
Adding it all up
The recovery is underway, but it is fragile. It will take years for farmers and growers to recoup their losses. With no insurance, huge clean-up costs, and modest support from government, most have borne the costs themselves through additional borrowing. That stresses balance sheets and puts our primary producers at the mercy of the banks.
Infrastructure is vulnerable. Bridges need to be rebuilt. State highways 2 and 5 are vital, fragile connections; Hawke’s Bay deserves better to get our goods to market and bring visitors to enjoy everything that we have to offer.
A massive amount of work has been done since the cyclone. Every industry representative in this article acknowledged the support given to cyclone recovery by people far and wide.
Spring was kind, harvests look promising. There is optimism. Who can blame growers for latching onto something positive, after what must be the shittiest year in a lifetime? But it’s tempered. Physical impacts of the cyclone have varied widely, literally paddock by paddock and orchard by orchard. There are some in the primary sector who are more worried about the future than others, and headwinds aplenty. Rural people are resilient, but they’re not superhuman.
It’s easy to be lulled into believing that we’re doing better than we actually are, when surrounded by so much abundance. Is the worst behind us? Probably. Are we out of the woods? Not by a long shot.