Dairy's role in sustaining New Zealand - Fonterra
Dairy's role in sustaining New Zealand - Fonterra
Dairy's role in sustaining New Zealand - Fonterra
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20 Dairy’s <strong>role</strong> <strong>in</strong> generat<strong>in</strong>g growth<br />
because of the currency appreciation caused by the growth <strong>in</strong> dairy<strong>in</strong>g.<br />
4.2 Detailed results<br />
4.2.1 Direct impacts<br />
4.2 Detailed results<br />
The direct<br />
4.2.1<br />
impacts<br />
Direct<br />
are<br />
impacts<br />
the ga<strong>in</strong>s of the dairy sector over the last decade. Figure 8<br />
shows that the dairy sector grew substantially between 1998/99 and 2008/09. Milk<br />
The direct impacts are the ga<strong>in</strong>s of the dairy sector over the last decade. Figure 8 shows<br />
solids output<br />
that the<br />
<strong>in</strong>creased<br />
dairy sector grew<br />
by<br />
substantially<br />
58%, use<br />
between<br />
of land<br />
1998/99<br />
grew<br />
and<br />
by<br />
2008/09.<br />
25%,<br />
Milk<br />
while<br />
solids<br />
total<br />
output<br />
factor<br />
productivity <strong>in</strong>creased rema<strong>in</strong>ed by 58%, usepositive of land grewfor by 25%, most whileof total the factordecade, productivitybefore rema<strong>in</strong>eddropp<strong>in</strong>g, positive<br />
unsurpris<strong>in</strong>gly, for most of dur<strong>in</strong>g the decade, the drought before dropp<strong>in</strong>g, seasons. unsurpris<strong>in</strong>gly, Productivity dur<strong>in</strong>g growth the drought is likely seasons. to return to<br />
positive Productivity trend levels growth now is likely that to more return‘normal’ to positiveclimatic trend levels conditions now that more have ‘normal’climatic returned. The<br />
sector’s conditions employment have grew returned. by The around sector’s 7,500 employment FTEs. grew These by around ga<strong>in</strong>s 7,500 would FTEs. have These been ga<strong>in</strong>slost<br />
if dairy rema<strong>in</strong><strong>in</strong>g would have stagnant been lost if at dairy 1998/99 rema<strong>in</strong><strong>in</strong>g levels. stagnant at 1998/99 levels.<br />
Figure 8 Dairy ga<strong>in</strong>s s<strong>in</strong>ce 1998/99<br />
Figure 8 Dairy ga<strong>in</strong>s s<strong>in</strong>ce 1998/99<br />
Source: Dairy NZ<br />
Source: NZIER<br />
4.2.2 Indirect impacts on other <strong>in</strong>dustries<br />
4.2.2 Indirect impacts on other <strong>in</strong>dustries<br />
A grow<strong>in</strong>g dairy sector <strong>in</strong>directly impacts other <strong>in</strong>dustries. These <strong>in</strong>direct impacts can be split<br />
A grow<strong>in</strong>g <strong>in</strong>to dairy the follow<strong>in</strong>g sector categories: <strong>in</strong>directly impacts other <strong>in</strong>dustries. These <strong>in</strong>direct impacts can<br />
be split <strong>in</strong>to • Supply<strong>in</strong>g the follow<strong>in</strong>g <strong>in</strong>dustries categories: – <strong>in</strong>dustries that supply dairy with <strong>in</strong>termediate <strong>in</strong>puts are likely to<br />
benefit from a stronger dairy sector. Both agricultural services and the fertilizer <strong>in</strong>dustry<br />
• Supply<strong>in</strong>g <strong>in</strong>dustries – <strong>in</strong>dustries that supply dairy with <strong>in</strong>termediate <strong>in</strong>puts are<br />
achieve significant ga<strong>in</strong>s, up 0.9% and 4.2% <strong>in</strong> 2009 versus where they would have been<br />
likely to benefit from a stronger dairy sector. Both agricultural services and the<br />
had dairy not grown over the last decade.<br />
fertilizer <strong>in</strong>dustry achieve significant ga<strong>in</strong>s, up 0.9% and 4.2% <strong>in</strong> 2009 versus<br />
where • they Household would expenditure have been <strong>in</strong>dustries had dairy – <strong>in</strong>dustries not grown that households over the last spend decade.<br />
money on are<br />
likely to benefit from <strong>in</strong>creased <strong>in</strong>come that comes through employment and wages, and<br />
<strong>in</strong>creased returns to capital from a grow<strong>in</strong>g dairy sector. Retail trade and real estate are<br />
both up: 0.5% and 0.7% respectively.<br />
• Government <strong>in</strong>dustries – <strong>in</strong>dustries that rely on government fund<strong>in</strong>g are positively<br />
NZIER – Dairy’s<br />
impacted<br />
<strong>role</strong> <strong>in</strong><br />
by<br />
generat<strong>in</strong>g<br />
a stronger economy<br />
growth<br />
22<br />
and bigger tax takes, as this <strong>in</strong>creases the money<br />
available for the government to spend. Spend<strong>in</strong>g on hospitals, schools and police are up<br />
0.6%, 0.7% and 0.2% respectively.<br />
• Compet<strong>in</strong>g export <strong>in</strong>dustries – <strong>in</strong>dustries that compete for resources (such as land and<br />
labour) with the dairy sector lose from dairy’s growth. Sheep and beef, <strong>in</strong> particular, grew<br />
by 10% less, crowded out by the growth <strong>in</strong> dairy<strong>in</strong>g. Similarly, apple and pear and the<br />
textiles <strong>in</strong>dustry both suffer from a higher currency that is a result of the growth <strong>in</strong> dairy.