Rural funding for irrigation scheme dries up
July 13th, 2009
A proposed mid-Canterbury irrigation scheme south of the Rakaia River has issued a $30m prospectus but looks unlikely to receive much support as the dairy sector downturn and global recession hits funding options. The Barrhill-Chertsey scheme which would irrigate 17,500ha for 200 farmers, received resource consent in 2001 and has obtained two extensions to the five-year consent as it has sought investment funding from lukewarm farmers. However, only about $1m worth of shares have been subscribed for so far and the offer has just a week to run.
Scheme chairman John Wright explains farmers and their bank funders are cautious about the six-figure sums required from each property holder in the current economic climate. However, directors have also been talking to institutional investors (Timaru-based Allan Hubbard is a shareholder). “We have a figure in mind that will determine if it’s sensible to go ahead. If we had a 50% uptake we’d go ahead.” The offer comes against a background of easing commodity prices and warnings from credit agencies about high debt in the dairy industry, particularly from large recently converted dairy farms (ironically, Barrhill-Chertsey farms are mainly arable but this sector has also suffered price declines). Wright does not hold out much hope for Govt subsidies to pay for the scheme as some farming leaders have been seeking.
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