Dairy's role in sustaining New Zealand - Fonterra

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Appendices Figures Tables H Dairy’s role in generating growth Appendix A CGE modelling framework 25 A.1 The MONASH-New Zealand CGE model: overview 25 A.2 Dynamics of the MONASH-NZ model 26 A.3 Database structure 26 A.4 Production structure (Horridge, 2008b) 28 A.5 Regional extension 29 Appendix B CGE and multiplier analysis 30 Appendix C Limitations of analysis 32 Appendix D References 33 Appendix E Dairy employment statistics 34 Appendix F Value of regional dairy production 38 Appendix G Changing dairy export markets 39 Figure 1 Impacts of dairy growth on the rest of the economy F Figure 2 Growth in dairy exports over past decades 4 Figure 3 Importance of dairy to regional employment 5 Figure 4 Model structure of the sector 6 Figure 5 Change in milk solids price: 1998-2009 11 Figure 6 Processed milk solids 11 Figure 7 Gross regional product impacts 17 Figure 8 Dairy gains since 1998/99 21 Figure 9 2009 Gross regional product impacts 23 Figure 10 Components of a CGE model 25 Figure 11 The MONASH-NZ database 27 Figure 12 Production structure 28 Figure 13 Changing markets for New Zealand’s dairy exports 39 Table 1 Value of regional dairy production 2 Table 2 Export values 3 Table 3 Farming industry structure 7 Table 4 Dairy processing industry structure 7 Table 5 Indirect impacts 2010 15 Table 6 National results 16 Table 7 Increase in gross regional product 17 Table 8 Average Cap Farm Cashflow 18 Table 9 Indirect impacts 2008/09 21 Table 10 National results 2009 22 Table 11 Increase in gross regional product 23 Table 12 IO vs. CGE multipliers 31
1. The current contribution of dairy 1.1 Purpose of report This report identifies the dairy sector’s current contribution to the New Zealand economy and looks at how changes in the dairy sector over the past decade have benefited districts and households in New Zealand. 1.2 Direct contribution to GDP The dairy sector, comprising farmers and dairy processors, directly contributed around $5.0 billion of value added (or GDP) to the New Zealand economy in 2010, around 2.8% of the total GDP figure 1 . By way of comparison, dairy GDP: • is greater than the GDP contribution of the fishing, forestry and mining sectors combined • is around 10 times as large as the GDP of the wine sector • is about 3 times as large as the forestry and logging sector • accounts for over a third of the GDP contribution of the entire primary sector (dairy and meat farming and processing, horticulture, fishing, forestry, mining) • is 40% larger than the entire utilities sector (electricity, gas and water) • is 2/3 as large as the entire construction sector • accounts for 15% of the total GDP of the goods producing industries Note that these figures are the direct contributions only. They do not take into account the links that the dairy sector has with the wider economy. In reality, the dairy sector also has indirect and induced effects on the New Zealand economy. The indirect effects accrue via the industries supporting the dairy sector (fertiliser, agricultural services, transport, etc). When the dairy sector grows, these supporting industries will also grow. The induced effects are attributable to the additional spending of dairy sector farmers and workers following a boost in dairy returns. This spending will be directed into sectors such as housing, clothing, bars and cafes, entertainment, etc. Some of these linkages are discussed in section 1.7 below. 2 1. Calculated from Statistics New Zealand SNA GDP by industry data and NZIER’s industry database. Measured in 2010 prices. 2. Unless one uses an unrealistic and non-credible methodology, it is not possible to calculate the total (direct plus indirect and induced) GDP contribution of dairy. See section 2.3 and Appendix B for further explanation Dairy’s role in generating growth 1
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: Contents 1. The current contributio
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 and 30: Table 9 Indirect impacts 2008/09 Pe
Page 31 and 32: Figure 9 2009 Gross regional produc
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
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Dairy's role in sustaining New Zealand - Fonterra

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