Dairy's role in sustaining New Zealand - Fonterra

22 Dairy’s role in generating growth
The slight reduction in overall export volumes is a result of an increased terms of trade, which
allows New Zealand to export less quantity for more value.
Overall, a combination of higher output and higher exports means New Zealand is
fundamentally wealthier because of the growth in the dairy sector. In terms of the nation’s
overall productive capacity, labour and land are able to switch to alternative uses (and
therefore could have been used by alternative industries); however productivity and capital
gains during the growth of the dairy sector lead to an increase in New Zealand’s GDP.
Table 10 National results 2009
Real percentage deviation from BAU levels
Indicator Percentage change Levels change, $
millions
GDP 0.37 $690
Private Consumption 0.77 $860
Public Consumption 0.77 $290
Exports (volume) -0.13 -$66
Imports (volume) 0.95 $350
Real wage 0.92 n/a
Capital 0.61 n/a
Ratio foreign liabilities to GDP -1.04 -$231 (1)
Source: NZIER
(1) Change in interest repayments on foreign debt
4.2.4 Regional impacts
The regional results in Figure 9 show that the impacts of growth in the dairy sector are not
uniformly distributed across the country. Some of the benefits are distinctly regional: much of
the growth in dairying over the last decade has been in Canterbury and Southland. While this
has reduced land available for sheep and beef farming, the increased economic activity in the
form of exports, wages and employment leads to strong growth in these districts.
Northland and Waikato districts also benefit significantly from growth in the dairy industry.
Increases in government spending lead to a benefit to the Wellington regional economy,
while Hawkes Bay, which is home to a large fruit and horticulture sector, has been slightly
crowded out by the growth in the dairy sector.
The impacts of volume growth on per person consumption or living standards in each region
are shown in Table 11.