The government is rolling out a new support package for growers, farmers, and businesses affected by cyclones.
The support includes underwriting bank lending and offering cheaper finance options to “ensure the long-term survival of critical regional industries”.
Wairarapa was one of the hard-hit regions after both Cyclone Gabrielle and Cyclone Hale, with wide-spread damage to farms and some communities cut off for days.
Finance Minister Grant Robertson said the impacts of severe weather continue to be felt, particularly by those in the horticultural sector.
He said the different types of support will comprise a loan guarantee scheme in partnership with banks and other lenders who choose to participate, and a concessionary loan and equity scheme run by Kānoa – the Ministry of Business, Innovation, and Employment’s regional economic development arm – to help hard-hit businesses get to a position to be able to “re-engage with their banks” while working toward being “cashflow positive” again.
Robertson said the North Island Weather Events Loan Guarantee Scheme will relieve affected businesses seeking commercial lending.
He said the scheme leverages the “crown’s financial strength” by taking 80 per cent of the credit risk on covered loans, allowing banks to reduce interest rates and offer more flexible terms.
“The government’s underwrite will support loans of up to five years agreed by businesses and their banks of up to $10 million from the scheme, including refinancing of existing loans.”
Robertson said more scheme details will be announced in the coming weeks and hopes it will be operational by the end of July.
The support package also includes the North Island Weather Events Primary Producer Finance Scheme to provide access to funds for affected growers and farmers unable to access lending without further support.
The funding will be targeted to severely affected businesses with a “reasonable likelihood of being commercially viable”.
Minister for Emergency Management, Rural Communities, and Wairarapa MP Kieran McAnulty said the scheme enables the government to provide concessionary loans and equity finance for “land-based primary sector producers” up to $4 million per business from a $240 million pool.
He said the loans will allow businesses to fully “re-engage with lenders” later once the government has helped them get back on their feet.
Wairarapa Federated Farmers president David Hayes said, at face value, what the government is offering will be welcomed by orchards, mostly in Hawke’s Bay, and farms severely affected by the cyclones.
He said he is a part-owner of an orchard in Hawke’s Bay, and many similar businesses are in “dire financial straits”.
Hayes said Federated Farmers is assuming the support is a one-off.
“We think that’d be entirely appropriate given the extremes of the weather and cyclone.”
He said that the scheme appears to be targeting a particular group of orchards and farms that are still viable, but it is unknown what will happen to those that are not viable.
Hayes added that it is likely that some Wairarapa farms and businesses will be able to benefit from the scheme, but how many is also not known.
