Dairy’s economic contribution 2020 update Enrico Dorigo John Ballingall 17 August 2020 Dairy GDP 2 Dairy directly adds $10.2b to the NZ economy Industry value added, NZD billions, March years $12 Dairy farming Dairy processing $10 $2.71 $2.84 $8 $2.54 $2.36 $6 $4 $7.13 $7.33 $6.33 $6.72 $2 $- 2017 2018 2019 2020 Source: StatsNZ, Sense Partners 3 Value added of selected export-focused industries, $billions, 2020 8.0 7.3 7.0 6.0 5.0 4.0 3.4 2.8 2.7 3.0 2.4 2.4 2.1 2.0 1.6 1.7 1.7 0.7 0.9 1.0 1.0 0.4 0.0 Fishing Forestry Basic metals Basic S&B farming S&B Dairy farming Paper products Paper Meat processing Meat Dairy processing Dairy Wood processing Wood Fabricated metals Fabricated Seafood processing Seafood Hort & fruitgrowing Hort Beverages & tobacco & Beverages Other food manufacturing food Other Source: StatsNZ, Sense Partners 4 Dairy makes a significant GDP contribution across regional New Zealand Regional GDP contribution, % of total GDP, $millions, 2019 Waikato Region 10.0%, $2,584 M Canterbury Region 5.3%, $1,988 M Taranaki Region 11.0%, $976 M Southland Region 14.3%, $911 M Manawatu-Wanganui Region 6.1%, $711 M Otago Region 3.9%, $525 M Dairy farming Auckland Region 0.4%, $512 M Dairy processing Northland Region 6.2%, $486 M Bay of Plenty Region 2.5%, $435 M West Coast Region 16.0%, $298 M Wellington Region 0.4%, $151 M Nelson/Tasman Region 2.1%, $115 M Hawke's Bay Region 1.2%, $101 M Marlborough Region 0.8%, $27 M Gisborne Region 0.9%, $19 M Source: StatsNZ, Sense Partners 5 Dairy workers and wages 6 Dairy employs 50,000 people directly Dairy sector employment 60,000 Dairy farming Dairy processing 13,310 50,000 40,000 Employment has 36,607 held steady at 30,000 around 50,000 jobs for the past 4 20,000 years, from a peak of 53,000 in 2015 10,000 0 2003 2018 2000 2001 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019 Source: StatsNZ, Sense Partners 7 On-farm jobs are growing through additional employees; self-employed numbers are relatively steady Dairy farming: workers paid wages/salary vs self- 30,000 employment 25,000 25,563 20,000 15,000 11,044 10,000 Wages and salaries 5,000 Self-employment 0 2012 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017 2018 2019 Source: StatsNZ, Sense Partners 8 Jobs growth in dairy has significantly outpaced the wider economy over the past 19 years Average annual jobs growth by industry 2000-2019 (excluding self-employees) 3.5% 3.0% 3.0% 2.5% 2.2% 2.0% 1.8% 1.5% 1.0% 0.8% 0.5% -0.1% 0.0% Dairy All industries excl. Primary sector excl. Agriculture excl. Manufacturing excl. -0.5% dairy dairy farming dairy farming dairy processing Source: StatsNZ, Sense Partners 9 Dairy directly generates $3.4b in wages Dairy directlygenerates $2.5 $3.0 $3.5 $4.0 $0.0 $0.5 $1.0 $1.5 $2.0 Billions 2000 2001 Dairy processing Dairy farming 2002 2003 2004 2005 2006 Dairy earnings total 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $1.6B 2019 $1.8B 10 Stable jobnumbersbutpaying better Stable $50,000 $60,000 $70,000 $80,000 $90,000 $10,000 $20,000 $30,000 $40,000 $0 2000 2001 2002 Dairy medianwagessector 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Dairy processing Dairy farming Source: StatsNZ, Sense Partners Sense StatsNZ, Source: 2013 2014 2015 2016 2017 2018 2019 11 Dairy on-farm and processing jobs pay well… Median wage across comparable industries Dairy farming $52,700 Other crop growing $50,440 Deer farming $49,020 Agriculture $48,360 Grain, sheep, and beef cattle farming $47,990 Fruit and tree nut growing $44,530 Poultry farming $43,230 Mushroom and vegetable growing $41,740 Nursery and floriculture production $40,140 Dairy processing $79,471 Food product manufacturing $55,760 Meat and meat product manufacturing $55,190 Grain mill and cereal product manufacturing $54,720 Fruit and vegetable processing $54,370 Seafood processing $48,870 Bakery product, sugar, and confectionery… $39,390 Source: StatsNZ, Sense Partners 12 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $- 2000 Agriculture farming Dairy 2001 2002 Median wages dairyMedianwages industries andother 2003 2004 2005 Food manufacturing Food Dairy processing 2006 2007 2008 2009 2010 Manufacturing industries All 2011 2012 2013 Source: StatsNZ, Sense Partners Sense StatsNZ, Source: 2014 2015 2016 2017 2018 2019 13 …and have been growing faster than others Average annual wage growth by industry 2000-2019 5% 4% 3% 2% 1% 0% Dairy farming Agriculture Dairy processing All industries Manufacturing Food manufacturing Source: StatsNZ, Sense Partners 14 Pumping wages into rural New Zealand Pumping wages into rural $100M $150M $200M $250M $300M $350M $400M $50 M $ M South Taranaki District Auckland Matamata-Piako District Southland District Selwyn District dairy earnings TA by Total Timaru District Waipa District Hamilton City Ashburton District South Waikato District Waikato District Westland District Clutha District Whangarei District Processing Dairy Farming Dairy Source: StatsNZ, Sense Partners Sense StatsNZ, Source: Whakatane District Palmerston North City Waimate District Christchurch City Taupo District Tararua District 15 Ten largest dairy jobs TAs and Council areas Jobs by TA Jobs by Regional Council South Taranaki District 3,939 Waikato Region 13,132 Southland District 3,857 Canterbury Region 10,103 Matamata-Piako District 2,882 Taranaki Region 4,936 Auckland 2,538 Southland Region 4,649 Selwyn District 2,509 Manawatu-Wanganui… 3,621 Ashburton District 2,502 Otago Region 2,679 Waipa District 1,996 Auckland Region 2,538 Waikato District 1,664 Northland Region 2,473 Timaru District 1,662 Bay of Plenty Region 2,223 South Waikato District 1,550 West Coast Region 1,507 Source: StatsNZ, Sense Partners 16 Dairy accounts for up to a 1/3 of all jobs in some Districts Dairy as a % of total employment by TA Waimate District 34% South Taranaki District 29% Otorohanga District 24% Southland District 22% Westland District 17% Matamata-Piako District 17% South Waikato District 16% Clutha District 13% Tararua District 13% Ashburton District 13% Source: StatsNZ, Sense Partners 17 Jobs growth by District: dairy and total, 2000-19 Mackenzie District 3% 14% Porirua City 0% 2% 1% Selwyn District 4% 7% Napier City* 0% 1% Waimate District 2% 6% Lower Hutt City* 0% Kawerau District* -1% Hastings District 2% 5% 0% Chatham Islands Territory 2% Waitaki District 2% 5% Total Dairy Total Dairy 0% Masterton District 2% Timaru District 2% 5% 0% Christchurch City 2% Hurunui District 3% 5% 0% Far North District 2% Ashburton District 2% 5% 0% Tararua District 0% Central Otago District 3% 4% 0% Wellington City 2% Southland District 1% 4% 0% Hauraki District 2% Waimakariri District 4%4% 0% Waikato District -1% 3% Invercargill City 2% 3% Kaikoura District -1% 2% Grey District 1% 3% Rotorua District -1% 1% Clutha District 1% 3% South Taranaki District -1% 1% Gore District 1% 3% Whakatane District -1% 2% Taupo District 2% 3% Whangarei District -1% 3% Westland District 2%3% Otorohanga District -1% 2% Ruapehu District 0% 2% Waipa District -1% 3% Hamilton City 2%3% South Wairarapa District -1% 2% Gisborne District 1% 2% Kaipara District -1% 2% Whanganui District 1% 2% Thames-Coromandel District -2% 2% Waitomo District 1%2% Tasman District -2% 2% South Waikato District 0% 1% Dunedin City -2% 1% Auckland 3% 1% New Plymouth District -2% 2% Horowhenua District 1% 1% Carterton District -2% 2% Central Hawke's Bay District 1% 1% Tauranga City -2% 4% Buller District 1% 1% Stratford District -2% 1% Manawatu District 2% 1% Western Bay of Plenty District -3% 3% Wairoa District 0% 0% Marlborough District -4% 2% Matamata-Piako District 2% 0% Opotiki District -4% 2% 1% Rangitikei District 0% Nelson City -5% 2% 2% Palmerston North City 0% Kapiti Coast District -7% 2% 6% Queenstown-Lakes District* 0% Upper Hutt City -9% 1% 18 *these TAs had 0 dairy employees in 2000 and more than 1 in 2019. They have been indicated as 0% for consistency Dairy exports 19 Dairy generates almost $20b of exports… Top merchandise trade exports in year to June 2020 Dairy $19.7B Meat $8.3B Wood $4.3B Fruit and nuts $3.7B Wine $1.9B Seafood $1.7B Engines, boilers and machinery $1.4B Aluminium and articles thereof $1.1B Optical, measuring, or medical instruments… $1.0B Mineral fuels, mineral oils and related… $0.7B Source: StatsNZ, Sense Partners 20 …accounting for a third of goods export revenue export of goods third for a …accounting 10% 15% 20% 25% 30% 35% 40% 0% 5% 1989 1990 1991 Dairyexports, exports merchandise total of as share June 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 years 2005 2006 2007 2008 2009 2010 2011 Source: StatsNZ, Sense Partners Sense StatsNZ, Source: 2012 2013 2014 2015 2016 2017 2018 2019 2020 34% 21 Exports have grown from $2.2b in 1989 to $20b now to $20b 1989 in from$2.2b grown have Exports $10 $15 $20 $25 Billions $0 $5 1989 1990 1991 1992 Dairy andrelated food products Dairy products 1993 1994 1995 dairy of exports,years June Value 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: StatsNZ, Sense Partners Sense StatsNZ, Source: 2012 2013 2014 2015 2016 2017 2018 $19.7B 2019 $20.8B 2020 22 Covering a range of products Source: StatsNZ, Sense Partners 23 Dairy exports have grown at over 7% p.a.