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Droughts and farms’ financial performance: a farm‐level study in New Zealand

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  • Farnaz Pourzand
  • Ilan Noy
  • Yiğit Sağlam

Abstract

We quantify the impacts of droughts in New Zealand on the profitability of dairy, sheep and beef farms using a comprehensive administrative database of all farms in New Zealand. For dairy farms, we found that drought events have positive impacts on dairy farms’ revenue and profit in the year of the drought. This effect is most likely attributable to drought‐induced increases in the export price of milk solids, as New Zealand is the market maker in this global market and almost all domestic dairy production is exported. All of these quantified impacts, however, are not very large, suggesting that, at this point in time, droughts have a fairly moderate impact on New Zealand dairy and sheep–beef businesses.

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  • Farnaz Pourzand & Ilan Noy & Yiğit Sağlam, 2020. "Droughts and farms’ financial performance: a farm‐level study in New Zealand," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), pages 818-844, July.
    • Handle: RePEc:bla:ajarec:v:64:y:2020:i:3:p:818-844
    DOI: 10.1111/1467-8489.12367
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    1. Elodie Blanc & Ilan Noy, 2022. "Impacts of Droughts and Floods on Agricultural Productivity in New Zealand as Measured from Space," CESifo Working Paper Series 9634, CESifo.

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