Dairy's role in sustaining New Zealand - Fonterra

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2 Dairy’s role in generating growth 1.3 Contribution to regional incomes In many rural areas, the contribution of the dairy sector to the local economy is far greater than the national average of 2.8% mentioned above. The dairy sector pumps hundreds of millions of dollars of revenue into regional economies each year. Table 1 shows the 15 highest revenue generating dairy districts in New Zealand. Dairy production injected over $700 million into the Southland district economy in 2009, with South Taranaki and Matamata-Piako both receiving well over half a billion dollars. For smaller district economies such as Ashburton ($471 million), Waipa ($361 million) and Selwyn ($270 million), the value of dairy production, relative to the total size of the district economy, is likely to be significant 3 . Also see Box story 1. Table 1 Value of regional dairy production $ millions, 2009 Region Dairy revenue Southland 710.35 South Taranaki 616.56 Matamata-Piako 552.12 Ashburton 471.11 Waikato 389.91 Waipa 361.00 Selwyn 269.91 South Waikato 262.53 Rotorua 253.55 Otorohanga 234.54 New Plymouth 206.31 Hauraki 196.40 Tararua 188.28 Timaru 185.13 Clutha 181.72 Notes: (1) Based on $5.50 price per Kg MS, 35c per Kg MS for stock sales and 4c per Kg of MS for other income Source: Dairy New Zealand, Fonterra, NZIER 1.4 Contribution to export performance Dairy exports were $10.4 billion in calendar year 2009, accounting for around 26% of NZ’s total goods exports. As Table 2 shows, this contribution far outstrips that of any other goods export sector. The third column in the table shows that dairy exports are twice those of the meat sector, over 6 times larger than all fruit exports, nine times larger than wine exports, twelve times larger than aluminium exports and 17 times larger than wool exports. In fact, dairy exports are about the same as the sum of the next four largest export sectors: meat, wood, mineral fuels (oil) and fruit & nuts. 3. Regional GDP information at this level of detail is not available from Statistics New Zealand, so the shares cannot be calculated.
Table 2 Export values $ millions, 2009 Sector Export value How many times dairy exports are larger than sector’s Dairy products 10,398 Meat products 5,142 2.0 Wood products 2,316 4.5 Mineral fuels 1,891 5.6 Fruit & nuts 1,597 6.6 Machinery parts 1,294 8.1 Fish 1,260 8.3 Miscellaneous 1,211 8.7 Wine & other beverages 1,183 8.9 Aluminium 880 11.9 Electrical machinery 826 12.7 Precious metals & stones 764 13.7 Wool 637 16.5 Wood pulp 610 17.2 Iron & steel 565 18.6 Optical & medical equipment 546 19.2 Paper & paperboard 526 20.0 Vegetables 405 25.9 Plastics 401 26.2 Hides & skins 375 28.0 Notes: (1) Source: Dairy NZ, Fonterra, NZIER Final report - 16 November 2010 Over the past decade, dairy export values have grown by more than 8% per year. Dairy has grown more rapidly than most primary sectors, and has become an increasingly important contributor to New Zealand’s total food and beverages and overall merchandise trade. Figure 2 Growth in dairy exports over past decades Figure Annual average 2 Growth growth in in dairy export exports values, 1999-2009 over past decades Annual average growth in export values, 1999-2009 Source: Statistics New Zealand, NZIER Source: Statistics New Zealand, NZIER Dairy’s role in generating growth Export growth has been driven by a combination of strong global income growth for 3
Page 1 and 2: Dairy’s role in sustaining New Ze
Page 3 and 4: Key points Dairy makes a very stron
Page 5 and 6: It drives many rural economies: “
Page 7 and 8: Contents 1. The current contributio
Page 9: 1. The current contribution of dair
Page 13 and 14: Figure 3 Importance of dairy to reg
Page 15 and 16: Table 3 Farming industry structure
Page 17 and 18: 2. Modelling dairy’s economic con
Page 19 and 20: Figure 5 Change in milk solids pric
Page 21 and 22: 3. Milk solids price spike 3.1 Head
Page 23 and 24: Table 5 Indirect impacts 2010 Perce
Page 25 and 26: Figure 7 Gross regional product imp
Page 27 and 28: 4. Production growth over the last
Page 29 and 30: Table 9 Indirect impacts 2008/09 Pe
Page 31 and 32: Figure 9 2009 Gross regional produc
Page 33 and 34: Appendix A CGE modelling framework
Page 35 and 36: Figure 11 The MONASH-NZ database Fi
Page 37 and 38: At the activity level, intermediate
Page 39 and 40: Table 12 IO vs. CGE multipliers Mul
Page 41 and 42: Appendix D References Bandara, J. S
Page 43 and 44: Farming Milk & cream Ice cream Chee
Page 45 and 46: Farming Milk & cream Ice cream Chee
Page 47: Appendix G Changing dairy export ma

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