Cash cow earns $3.8b

18:42, Jul 15 2014

All hail the mighty mooloo cow - all 1.36 million of them - after new data showed the Waikato region's dairy industry contributed $3.8 billion to the local economy last season.

It is a $1 billion lift on the 2012-13 season despite drought affecting Waikato farmers for the second year in a row. The extra cash is largely due to the record payout farmers received for their milk from the 2013-14 season.

Waikato was also New Zealand's top provincial performer in dairying last season. In earning $3.8b, it retained its top spot from the previous year, followed by Canterbury with $2.77b, Southland with $1.72b and Taranaki with $1.44b.

In total, the industry contributed $14.32b to the national economy, up $4b from the 2012-13 season.

It also underlined the value of the dairy cow to the Waikato, where each contributed $2778 each to the region's economy.

The region's 1.36m cows produced 209.2m kilograms of protein and ate their way through 5.3m tonnes of grass last season.


The statistics are a combination of data work from Statistics New Zealand, the NZIER and DairyNZ's economic survey and are based on a $7.85/kg milk solids payout.

DairyNZ chief executive Tim Mackle said the statistics were hugely exciting for New Zealand.

"In 2012-13 it was $2.76 billion, this year we are looking at $3.8 billion. That's a billion dollars based on a $6.18 payout last year."

Mackle said that higher value was largely due to the higher milk price.

It also flowed through to the rest of the economy, with farmers using local service providers to care for their stock, improve their farm infrastructure, or pay off debt.

"The whole economy regionally benefits from that," he said.

Some Waikato farmers were down on production last season, but the record milk price made up for that loss, he said.

Elsewhere, areas not in drought had the double whammy of the high milk price and record production.

"On average were almost going to end up almost 10 per cent up nationally on milk production this year in the season gone."

That will provide a huge boom for the country, he said.

The figures showed that dairying was a significant driver in the local economy and that a large majority of business directly or indirectly serviced the industry, Waikato Federated Farmers president Chris Lewis said.

The statistics also surprised him.

"It's not something you think about every day. All you think about is that you are one part of the cog that is contributing to society."

A major reason why the Waikato economy was doing so well was because of the high expenses that came with running a dairy farm, he said.

On average, farmers spent $1516 on every cow in 2013, including many locally sourced products and services including supplementary feed, fertiliser, veterinary services, health products and dairy shed supplies.

Other farming industries, including sheep and beef, were also large contributors to the economy, he said.

According to DairyNZ's 2012-13 regional data, dairy employees numbered 11,630, or 6.9 per cent of total regional employment. There were also 2526 owner operators and 1531 sharemilkers.

Mackle said the data showed that nationwide, the industry contributed about 40 per cent more than the previous year and injected much of that back into growth, farm spending and jobs, Mackle said.

"Our latest survey shows the financial value that dairy farmers bring into each province, helping grow residents' wealth even if they are not dairy farming themselves."

Looking ahead, he said it was still early days to speculate on the new season. Milk prices had come back, but the $7/kg milk solids forecast was still a good forecast historically.

Whether dairying's growth was sustainable was a big question and the industry was working hard to try to get more value for its milk, he said.

"It can't all be about volume. We have got to get a lot more value for the milk we do produce and that is by generating a lot more value in the milk for customers."

Fonterra and Tatua were working on that, he said.

Waikato Times