Dairy’s value to heartland New Zealand

The purpose of the report commissioned by the Dairy Companies Association of NZ (DCANZ) was to highlight to government the value of dairying as an export earner and to show the economic impact of the sector to the regions. The report was prepared by the NZ Institute of Economic Research.

DCANZ executive director Kimberly Crewther says while many people will already know that dairy is NZ’s largest export sector, the report shows how $17 billion of revenue is shared across the economy as income and a driver of economic activity. She says it shows how important dairy is to many regions where there are few economic options. She says almost 80% of dairy sector wages are earned in rural areas.

“Dairy is the top income generator, delivering more than 10% of GDP, in Waikato, Southland, West Coast and Taranaki. It is also the second-largest contributor to economic activity in Northland and Manawatu, and the third largest in Canterbury and Bay of Plenty,” she says.

Crewther says the dairy sector accounts for $8.2b of NZ’s GDP with dairy farming earning $6.2b and dairy processing $1.9b. She says dairy farming is the fifth-largest industry in NZ behind finance, construction, real estate and health.

Dairy directly employs 38,000 people – 26,000 on farms and 12,200 in processing plants. And it creates many jobs in supporting industries, has the highest average salary amongst agricultural industries and the highest average salary level of NZ’s food manufacturing industries. Crewther says dairy manufacturing has the fifth-highest average female salary level of 138 NZ industries.

She says dairy manufacturers have invested at least $3.1b in processing facilities in recent years and this will maintain the trend for adding value to NZ milk and the resulting economic revenue generation.

“For example, infant formula has grown to being a billion-dollar export industry, and within more traditional product categories like cheese, butter and milk powders, NZ dairy exporters have shifted from standard products to speciality ingredients, including for supply to growing food service and bakery industries in key markets.”