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