Dairy contributes significantly to GDP and employment, with income circulating widely in the economy.
The agriculture industry bolsters employment in other sectors.
New Zealand’s dairy industry employs approximately 50,000 people.
“It’s the economy, stupid.”
This phrase remains both relevant and important, despite its age.
It was coined in 1992 by James Carville, when he was advising Bill Clinton in what turned out to be a successful run for the White House, and has appeared at regular intervalsbecause it has captured the frustrations of the times repeatedly.
Without a vibrant economy, everything that people say they want in terms of healthcare, education, infrastructure, reduced cost of living and increased income will not be possible.
Finance Minister Nicola Willis tried to explain the importance of the economy to Green Party MP Steve Abel at the beginning of the month.
The debate appeared to have been set up on the question “Is farming New Zealand’s backbone?” but it came down to a series of repeated misstatements about the impact of dairy cows on the environment and farmers keeping the monetary gains to themselves.
“Does dairy drive prosperity or pollution?” has been an alternative headline.
A 2023 report makes the same point – wealth is shared.
The wider dairy sector purchases goods and services from approximately a third of all industries in the New Zealand economy (NZIER reported 40 industries for dairy farming accounting for 41% of GDP, and 33 industries for dairy processing accounting for 29% of GDP).
Farmers also purchase professional services to support their operations, $933 million on agricultural services (contractors, for instance), $434m on financial services and $200m on accounting and tax services.
Certainly, the direct contribution of dairy to New Zealand’s GDP is less than 4%, as stated by Abel, but its impact is very much greater.
Agricultural economist Phil Journeaux has calculated that for every permanent increase of $1m in dairy output, there is a $7.2m increase in value added within the economy, and extra employment of 8.7 FTEs.
Willis gave the total figures – dairy accounts for $25.7 billion ($11.3b of which is “value-added”) and employs approximately 50,000 people.
More income from increased productivity and added value means more employment and more money circulating – over seven times as much through the community as comes to a dairy farmer for the milk produced, boosting GDP in the regions.
The primary sector is driving the economic recovery.
This has been explained by Willis, and Auckland knows this is the case.
Dr Jacqueline Rowarth writes that there should be no debate about farming's contribution to New Zealand's economy.
Employers and Manufacturers Association (EMA) head of advocacy Alan McDonald has stated that the agriculture industry is bolstering employment elsewhere, but Auckland has different economic drivers, and unemployment is higher than the rest of the country.
Auckland has asked for assistance, that assistance will be paid for by the primary sector.
The counterarguments placed by Abel ranged from “known” to “shown to be a misunderstanding”.
Agriculture is the biggest user of water, almost 80% of consumptive use.
However, consumptive use as a proportion of the water available is very small.
New Zealand as a whole uses less than 5% of the available water (BERL estimates approximately 2%), which means agriculture’s role in growing food is using less than 4% of the total available.
The concept of nitrogen-laden cow urine contaminating the waterways has been shown to be a misunderstanding.
Nitrogen in water has been measured since the 1940s, and was high in some areas a long time before the dairy boom.
