In two years $8 billion revenue has been lost compared to the stellar 2013-14 season when Fonterra farmgate prices soared to $8.40 a kilogram of milksolids.
The average dairy herd of 413 cows earned $1.3 million in 2013-14, but that has fallen to $600,000 this season.
Eftpos provider Paymark figures show the four most concentrated dairy regions (Waikato, Taranaki, West Coast and Southland) have experienced slower annual growth rates in recent quarters.
For the March quarter 2016, the annual underlying spending growth rate in Waikato, Taranaki, West Coast and Southland at 6.2 per cent was 2.1 per cent below the average in the rest of the country. The growth gap between these four regions and the rest of the country widened from late 2014.
Paymark says the implied spending shortfall in the four regions in the March quarter was $31.3m, or for the 12 months ended March, the annual shortfall in the concentrated dairy regions was $194m or a 3.2 per cent lower annual growth rate than averaged in other regions.
The implied spending shortfall is spread over many sectors. There was a drop in spending amongst automotive merchants (including service stations) in all four regions in contrast to a small rise in other regions.
The auto sectors in all regions were affected by the falling fuel price but the spending effect was even greater in the four dairy regions.
There was also a lower rise than elsewhere in spending on food and liquor, especially in Taranaki.
Hospitality spending growth was lower than average in three regions, but above average in Southland, which includes Te Anau and Milford Sound, suggesting tourism is providing a counter balance.
Retail spending was also lower than average in Taranaki and on the West Coast, however both Southland and Waikato regions rose faster than the average rate.
Paymark said Southland’s growth was likely due to the impact of tourism but in the Waikato housing-related spending offset the drop off in the dairy sector.
The sectors recording fastest annual growth rates in April included the furniture and hardware sector (+15.2 per cent), the motor vehicle and parts sector (+19.3 per cent) and the food and beverages sector (+18.1 per cent).
Annual underlying spending growth through Paymark was highest in Auckland/Northland (+13 per cent) and Bay of Plenty (+12 per cent), and lowest in West Coast (+2.9 per cent) and Taranaki (+5 per cent).
Source: Stuff
