Dairy's role in sustaining New Zealand - Fonterra

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About NZIER NZIER is a specialist consulting firm that uses applied economic research and analysis to provide a wide range of strategic advice to clients in the public and private sectors, throughout New Zealand and Australia, and further afield. NZIER is also known for its long-established Quarterly Survey of Business Opinion and Quarterly Predictions. Our aim is to be the premier centre of applied economic research in New Zealand. We pride ourselves on our reputation for independence and delivering quality analysis in the right form, and at the right time, for our clients. We ensure quality through teamwork on individual projects, critical review at internal seminars, and by peer review at various stages through a project by a senior staff member otherwise not involved in the project. NZIER was established in 1958. Authorship Prepared by: Chris Schilling, James Zuccollo and Chris Nixon Quality approved by: John Ballingall Date: 15/11/2010 3:49 PM Version: Final Acknowledgements:
Key points Dairy makes a very strong direct contribution to the NZ economy • The dairy sector directly accounts for 2.8% of GDP, or $5 billion. This contribution is: o greater than the GDP contribution of the fishing, forestry and mining sectors combined o around 10 times as large as the GDP of the wine sector o about 3 times as large as the forestry and logging sector o over a third of the GDP contribution of the entire primary sector (dairy and meat farming and processing, horticulture, fishing, forestry, mining) o 40% larger than the entire utilities sector (electricity, gas and water) o 2/3 as large as the entire construction sector o 15% of the total GDP of the goods producing industries and o provides 26% of New Zealand’s total goods exports. And contributes to the health of the NZ economy in many ways • But the sector’s influence extends well beyond its direct impacts. Dairy is closely intertwined with the rest of the economy. This includes the jobs it delivers, the income that these workers earn, its links to supplying firms, the effects of rural economic growth on urban centres, the tax revenue it provides and the public services that can be funded from this tax revenue. These links are shown in the figure at the end of this section. • Of the $10.4 billion of dairy products exported in 2009, o $7.5 billion is used to purchase raw milk from the dairy farming sector. o $1.5 billion is retained as returns to labour and capital (i.e. wages and rate of return). o $625 million is spent on intermediate inputs from New Zealand. This includes $85 million of plastic containers, $45 million on electricity and $22.5 million on financial services. o Imported intermediate inputs account for $310 million – largely plastic containers ($182 million) and other food products to be used in processing ($30 million). o $730 million is spent on retailing/wholesaling costs that get the dairy products from the plant to market. • Of the $7.5 billion value of raw milk output, $3.0 billion is retained as returns to land, labour and capital. A further $3.6 billion is spent on domestically produced intermediate inputs, such as fertilizer ($447 million), feed ($723 million), agricultural services ($446 million), financial services Dairy’s role in generating growth C
Page 1: Dairy’s role in sustaining New Ze
Page 5 and 6: It drives many rural economies: “
Page 7 and 8: Contents 1. The current contributio
Page 9 and 10: 1. The current contribution of dair
Page 11 and 12: Table 2 Export values $ millions, 2
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

Dairy's role in sustaining New Zealand - Fonterra

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