Dairy's role in sustaining New Zealand - Fonterra

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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.
Figure 9 2009 Gross regional product impacts Real percentage deviation from BAU levels Figure 7 Gross regional product impacts Real percentage deviation from BAU levels Source: NZIER Source: NZIER Table 7 11 Increase in in gross regional product Region Region Per person increase in GRP Per person increase in GRP Northland Northland Auckland Auckland Waikato $170 -$4 $110 $8 $270 Waikato Bay Of Plenty $130 $84 Bay Gisborne Of Plenty $66 $74 Gisborne Hawkes Bay $100 -$100 Hawkes Taranaki Bay $39 $140 Taranaki Manawatu-Wanganui $160 $120 Manawatu-Wanganui Wellington $140 $160 Wellington Tasman-Nelson $140 $12 Marlborough Tasman-Nelson $12 -$4 West Coast Marlborough Canterbury West Coast Otago $54 $69 $7 $590 $39 Canterbury Southland $41 $650 Otago $82 Source: NZIER Southland $68 Source: NZIER NZIER – Dairy’s role in generating growth Final report - 16 November 2010 Dairy’s role in 19 generating growth 23
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 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: Table 9 Indirect impacts 2008/09 Pe
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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