Dairy dollars keep economy healthy - NZIER report
It’s official. New Zealand’s 4.4 million cows are doing their bit for New Zealand’s 4.39 million people, with high dairy export revenues supporting jobs, keeping interest rates down and enabling more Government spending on essential services.
An independent report by the New Zealand Institute of Economic Research, released today, shows money from milk flows right through the economy, starting at the farm gate and moving out to rural and urban communities.
The report to Fonterra and DairyNZ shows:-
· Dairy provides 26% of New Zealand’s exports.
· A $1 rise in Fonterra’s payout makes every New Zealander nearly $300 better off.
· Dairy farmers spent around 50c in every dollar they received on locally produced goods and services.
· Every tonne of dairy exports helps reduce the current account deficit, bringing down interest rates and reducing mortgage payments for homeowners.
· Dairying employs 35,000 workers directly and a further 10,000 contractors.
Fonterra CEO Andrew Ferrier said today the report, commissioned by Fonterra and DairyNZ, will enable New Zealanders to better understand that when dairy does well, New Zealand does well.
“Most people understand dairy is a key export industry. Now they can understand what it means for them as the report accurately quantifies, for the first time, the tangible benefits to both rural and urban communities,” said Mr Ferrier.
An increase of $1 to Fonterra’s payout boost real incomes by about $270 for every person in New Zealand, showing everyone benefits when the company does well.
“Of the $7.5 billion farmers received in 2009, $3.6 billion was spent on domestically produced goods, including fertiliser, feed, agricultural services and financial services.
“There is no doubt that dairy has helped us out of the recession and the benefits extend well beyond the farm gate. Export growth from the dairy sector has helped narrow the current account deficit and that helps everyone through lower interest rates on mortgages and other borrowings.”
NZIER Deputy Chief Executive, John Ballingall, said: “Our modelling shows that the dairy sector has delivered significant and ongoing benefits to the New Zealand economy.”
“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 sector’s strength has been very 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.”
DairyNZ Chief Executive, Dr Tim Mackle, said that last year dairying kept 35,000 people directly in work. “Our contribution to jobs is like having a city the size of Gisborne all working in the dairy industry. Urban centres also get a healthy share of indirect employment as they provide essential goods and services that are needed to produce dairy products.”
Dr Mackle said the NZIER report shows dairy accounts for 26 per cent of New Zealand’s total exports and it is looking to grow its contribution to the country.
“We’ve got a good track record of supporting regional growth, which this report shows, and we want to continue this trend. The challenge for our industry will be in how we achieve this growth in a sustainable way,” said Dr Mackle.
The NZIER report details dairying’s regional contribution. Highlights are included in the table below. Revenue figures are for 2009.