The importance of dairying to the wider economy has been underlined in a new report that shows every $1 rise in Fonterra's payout adds about $590 million to the country's gross domestic product.The independent report by the New Zealand Institute of Econom
The importance of dairying to the wider economy has been underlined in a new report that shows every $1 rise in Fonterra’s payout adds about $590 million to the country’s gross domestic product.
The independent report by the New Zealand Institute of Economic Research confirms that growth in the dairy sector since 1998 has generated significant living standard improvements outside the farm gate, including in metropolitan areas such as Auckland and Wellington.
The main conclusions of the report show:
-Dairy provides 26% of New Zealand exports,
- A $1 rise in Fonterra’s payout boosts real incomes by about $270 for every New Zealander,
- Dairy farmers spend around 50c in each dollar received on locally produced goods and services,
- Dairying employs 35,000 workers directly and a further 10,000 contractors,
- Waikato is the main benefactor with regional production worth $2.4 billion in 2009, followed by Canterbury with $1 billion.
NZIER deputy chief executive John Ballingall said the sector’s growth has been evident as New Zealand recovers from the global financial crisis and domestic recession.
“Given anaemic domestic demand, the export side of the economy has been relied on to generate economic growth and dairy has made a significant contribution.
“Its influence extends well beyond its direct impacts in dairying areas, with the sector closely intertwined with the rest of the economy. That includes the jobs it delivers, the income that these workers earn, its links to supply firms, the effects of rural economic growth on urban centres and the tax revenue it provides to fund public services."
The report does not, however, consider Crown costs associated with the increased greenhouse gas emissions resulting from dairy production.
“In our modelling framework, if dairy had not grown since 1998/99, other sectors would have soaked up the spare resources (land, labour, capital, energy, etc)," the report noted.
"These sectors would then have produced additional emissions. Ascertaining the net effect of this shift in production is difficult.”
