As well as Taranaki, the dairy anchors the provincial economy in Waikato, West Coast and Southland, according to the findings of the New Zealand Institute of Economic Research (NZIER).
Besides employing 38,700 people on farms and in processing plants across the regions, dairy provides thousands of jobs in agriculture and forestry support services, wholesaling, veterinary services, and rail transport.
The NZIER report, commissioned by the Dairy Companies Association of New Zealand, paints a glowing picture of the industry, which generates $17 billion worth of exports. It is the largest exported good, almost three times more than the next biggest, meat.
While horticulture has been a rising star, earnings from dairy dwarf its contribution. If considered as standalone sectors, butter and spreads would be larger than fruit and nuts, and cheese would be larger than either wine or seafood.
The report’s findings show:
The dairy sector accounts for 11 per cent of Taranaki’s economy
The region earned approx $975m from dairy in 2017
Dairy is the largest employer in South Taranaki, accounting for 3,250 jobs
Dairy provides more than 1 in 4 jobs in South Taranaki (27 per cent)
Dairy contributes approx $270m in wages in South Taranaki
By comparison, the region’s oil and gas industry pumped $1.57billion into Taranaki’s total GDP in 2015, according to a Venture Taranaki report.
Taranaki is home to four Fonterra sites – Whareroa, Kapuni, Eltham (Collingwood Street) and Eltham (Bridge Street).
Donald Lumsden, the dairy giant’s regional head, said Taranaki accounted for about 20 per cent of Fonterra’s global exports.
«It’s what we would call a heartland dairy area,» he said. «It’s very important, a significant part of the Taranaki economy but also a significant of Fonterra and the New Zealand economy.»
Taranaki Chamber of Commerce chief executive Arun Chaudhari welcomed the findings from the NZIER report.
The report showed dairying was still a major component in Taranaki’s economy as its provided employment and contributed greatly towards the regions GDP, he said.
As the region’s oil industry experienced uncertain times ahead as it moved towards transition, more importance went on supporting the dairy industry, he said.
«The dairying industry is here to stay in Taranaki and long may it continue but we can’t be complacent,» he said.
«We need to be responsible around managing dairying with the environment, and with animal welfare to keep the local economy thriving.»
Inglewood dairy farmer, and Taranaki Federated Farmers president, Donald McIntyre said dairying was ready to face future challenges from environmental regulations, and climate change.
«The report shows us nothing new as the region has been built around dairying and the farming sector for many years,» he said.
«We’ve become more efficient with company amalgamations and creating added value plants.
«We’ve got to be prepared to adapt and change with the times so we can move with the times and face the challenges.»
Dairy Companies Association executive director Kimberly Crewther said earnings from dairy were diverse, including products such as infant formula which had grown to being a billion dollar export industry.
She stressed the importance of trade liberalisation, which had reduced tariffs, resulting in New Zealand dairy exports being worth $2.3b higher than otherwise.
Remaining tariffs suppress the value of New Zealand dairy exports by about $1.3b a year.
Victoria University freshwater ecologist Mike Joy said the report would have meant more if it had looked at the pluses and minuses of dairying.
He and colleagues have estimated the costs of cleaning up waterways at billions of dollars a year.
NZIER chief executive Laurence Kubiak said the report had not set out to cover anything but economic impacts.
«Dairying faces hefty challenges on the environmental front, you’ve got emissions and nitrates, but this report demonstrates the fact it’s the mainstay of so many of our regions.»
Solving environmental problems needed to be done in an evolutionary way, or else a lot of things which create value would be destroyed, Kubiak said.