The just-released New Zealand Institute of Economic Research (NZIER) report says Southland made $700 million from dairying in 2017, compared with $654m in 2016.
Southland, Ashburton and South Taranaki’s (the top three producers in the New Zealand territorial authorities) combined production was valued at $2.9b in 2016-2017 – a quarter of the national value.
The Dairy Companies Association of New Zealand executive director Kimberly Crewther said the report was commissioned as part of the associations’ input into the recent Ministry of Foreign Affairs and Trade Trade For All agenda consultation.
Production had been pretty stable during the past four years but growth going forward was likely to be largely linked to productivity, she said.
The trend for adding value to milk through a range of products and growing export revenue from them should continue, with a $3.1b investment by companies into manufacturing facilities in recent years.
The NZIER figures show Fonterra’s food services business is growing at three times the global rate, with more than 50 per cent of the 300 million pizzas sold in China topped with the company’s cheese each year.
Figures show investment into infant formula plants and canning lines by Westland, Fonterra, Oceania, Synlait, and Yashili has extended the processing of New Zealand milk from powder to a consumer format stage, and this had grown exports of added-value product to nearly $1b.
The dairy sector accounts for 14.8 per cent of Southland’s economy and more than 10 per cent of the region’s GDP.
With a population of less than 100,000 people, it continues to be the largest employer, accounting for 2890 jobs – that’s about 1 in 6 jobs – and Southland is in the top two dairy regions for jobs, with south Taranaki employing 3250 people in 2017.
About $160m was earned in wages in Southland in 2017, similar to 2016; that’s from a total of $2.6b delivered nationally.
Fonterra’s Southland regional head Mark Robinson said factors in Southland’s strong performance included higher milk prices, and higher productivity from better weather compared with the three or four seasons prior to 2017.
He said higher earnings would always be linked to milk prices, so in that regard, there was room for growth.
However, looking ahead, he did not think the industry and Southland would ever see the same growth experienced in the past 15 years.
«We going to see some conversions and efficiencies gained and environmental impacts on the way that we farm.»
With the downturn in dairying a few years ago, the focus had moved into productivity, and that trend had carried on; less cows but more milk.
The area of growth would definitely be value added products, such as mozzarella cheese, UHT milk and the lactose coatings for medicines, he said.
Southland Federated Farmers executive member and sharemilker Jonathan Breach believed that the big high in the dairying sector would die down.
«I don’t think it is going to grow, and the greenie part of me says it is better if it doesn’t.»
This week, Conservation Minister Eugenie Sage expressed concern that about a quarter of Southland’s wetland had disappeared in the past 28 years, and that 60 per cent of it had been lost to agriculture and horticulture.
«I think there’s areas [of Southland] that should never have been developed, and if the change to legislation had happened 10 years ago, a lot of that land would not have been converted,» Breach said.
His strong beliefs had led to cutting his western Southland-based herd from 1200 cows to 600.
«I’ve changed how I do everything … there was just too much stress, we were always struggling to get staff; We’ve got lower inputs but better productivity and we’re keeping staff.»
He said he would not be surprised if other small sharemilkers continued to do the same, to make life more manageable and sustainable.
«I think exports will still increase, but it will be the value added products that will increase.»
