Dairy pay­outs see all Ki­wis bet­ter off

South Waikato News - - RURAL DELIVERY -

A$1 rise in Fon­terra’s pay­out to farm­ers makes ev­ery New Zealan­der about $270 bet­ter off, says a new eco­nomic re­port.

Fon­terra and DairyNZ com­mis­sioned the New Zealand In­sti­tute of Eco­nomic Re­search to mea­sure how much dairy­ing and its ex­ports are worth to the econ­omy.

The find­ings showed dairy pro­vided 26 per cent of New Zealand ex­port re­turns, dairy farm­ers spent about 50c in ev­ery dol­lar they re­ceived on lo­cally pro­duced goods and ser­vices, and ev­ery tonne of dairy ex­ports helped re­duce the cur­rent ac­count deficit, bring­ing down in­ter­est rates and re­duc­ing house­hold mort­gage pay­ments.

The re­port said the dairy sec­tor di­rectly ac­counted for 2.8 per cent of GDP (or $5 bil­lion).

This year’s $ 1.17/ kg in Fon­terra’s pay­out to farm­ers would gen­er­ate an ex­tra $316 per per­son in New Zealand, it es­ti­mated.

Dairy­ing em­ployed 35,000 peo­ple di­rectly and pro­vided fur­ther work for 10,000 contractors.

The re­port said dairy pro­duc­tion was ‘‘ hugely’’ im­por­tant for many re­gional economies. It in­jected more than $700 mil­lion into the South­land econ­omy last year, with South Taranaki and Mata­mata-Pi­ako re­ceiv­ing well over $500m each.

In the Waikato re­gion dairy pro­duc­tion was worth $2.4b and em­ployed more than 8000 peo­ple.

Of the $ 10.4b of dairy prod­ucts ex­ported last year, $7.5b was used to pur­chase raw milk from farm­ers, $1.5b was re­tained as wages and cap­i­tal and $625m was spent on goods from New Zealand sup­pli­ers.

Fon­terra chief ex­ec­u­tive An­drew Fer­rier said the find­ings would help New Zealan­ders bet­ter un­der­stand that when dairy­ing does well, New Zealand does well.

Of the $ 7.5 bil­lion farm­ers re­ceived from Fon­terra last year, $3.6b was spent on do­mes­ti­cal­lypro­duced goods, in­clud­ing fer­tiliser, feed, agri­cul­tural ser­vices and fi­nan­cial ser­vices, he said.

‘‘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 the in­sti­tute’s mod­el­ling showed the dairy sec­tor’s strength had been ev­i­dent as the coun­try re­cov­ered from the global fi­nan­cial cri­sis.

‘‘The ex­port side of the econ­omy has been re­lied on to gen­er­ate growth and dairy has made a sig­nif­i­cant con­tri­bu­tion.’’


MONEY MAT­TERS: The dairy in­dus­try con­trib­utes a quar­ter of New Zealand’s ex­port re­turns.

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