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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1. The current contribution of dairy<br />
1.1 Purpose of report<br />
This report identifies the dairy sector’s current contribution to the <strong>New</strong> <strong>Zealand</strong> economy<br />
and looks at how changes <strong>in</strong> the dairy sector over the past decade have benefited districts<br />
and households <strong>in</strong> <strong>New</strong> <strong>Zealand</strong>.<br />
1.2 Direct contribution to GDP<br />
The dairy sector, compris<strong>in</strong>g farmers and dairy processors, directly contributed around $5.0<br />
billion of value added (or GDP) to the <strong>New</strong> <strong>Zealand</strong> economy <strong>in</strong> 2010, around 2.8% of the<br />
total GDP figure 1 . By way of comparison, dairy GDP:<br />
• is greater than the GDP contribution of the fish<strong>in</strong>g, forestry and m<strong>in</strong><strong>in</strong>g sectors comb<strong>in</strong>ed<br />
• is around 10 times as large as the GDP of the w<strong>in</strong>e sector<br />
• is about 3 times as large as the forestry and logg<strong>in</strong>g sector<br />
• accounts for over a third of the GDP contribution of the entire primary sector (dairy and<br />
meat farm<strong>in</strong>g and process<strong>in</strong>g, horticulture, fish<strong>in</strong>g, forestry, m<strong>in</strong><strong>in</strong>g)<br />
• is 40% larger than the entire utilities sector (electricity, gas and water)<br />
• is 2/3 as large as the entire construction sector<br />
• accounts for 15% of the total GDP of the goods produc<strong>in</strong>g <strong>in</strong>dustries<br />
Note that these figures are the direct contributions only. They do not take <strong>in</strong>to account the<br />
l<strong>in</strong>ks that the dairy sector has with the wider economy. In reality, the dairy sector also has<br />
<strong>in</strong>direct and <strong>in</strong>duced effects on the <strong>New</strong> <strong>Zealand</strong> economy. The <strong>in</strong>direct effects accrue via<br />
the <strong>in</strong>dustries support<strong>in</strong>g the dairy sector (fertiliser, agricultural services, transport, etc). When<br />
the dairy sector grows, these support<strong>in</strong>g <strong>in</strong>dustries will also grow. The <strong>in</strong>duced effects are<br />
attributable to the additional spend<strong>in</strong>g of dairy sector farmers and workers follow<strong>in</strong>g a boost<br />
<strong>in</strong> dairy returns. This spend<strong>in</strong>g will be directed <strong>in</strong>to sectors such as hous<strong>in</strong>g, cloth<strong>in</strong>g, bars and<br />
cafes, enterta<strong>in</strong>ment, etc. Some of these l<strong>in</strong>kages are discussed <strong>in</strong> section 1.7 below. 2<br />
1. Calculated from Statistics <strong>New</strong> <strong>Zealand</strong> SNA GDP by <strong>in</strong>dustry data and NZIER’s <strong>in</strong>dustry database. Measured <strong>in</strong> 2010 prices.<br />
2. Unless one uses an unrealistic and non-credible methodology, it is not possible to calculate the total (direct plus <strong>in</strong>direct<br />
and <strong>in</strong>duced) GDP contribution of dairy. See section 2.3 and Appendix B for further explanation<br />
Dairy’s <strong>role</strong> <strong>in</strong> generat<strong>in</strong>g growth<br />
1