Dairy sector faces trade and infrastructure hurdles, despite export growth - report

The report said the dairy industry's productivity would be enhanced by improved infrastructure resilience. Photo / RNZ / Rebekah Parsons-King

RNZ

The dairy sector generated about $26 billion in export dollars in the year to April 2023 but continues to struggle with significant trade barriers, costs and infrastructure challenges.

A Sense Partners report commissioned by DairyNZ and the Dairy Companies Association (DCANZ) focused on the importance of ongoing investment in trade liberalisation and resilient domestic roading and rail infrastructure.

DCANZ executive director Kimberly Crewther said nearly 87 per cent of global dairy consumption was subject to trade tariffs of 10 per cent or more, costing dairy exporters more than $1.5b in tariffs and $7.8b in non-tariff costs over the past year.

“Reducing them will support exporters to continue growing the export value of New Zealand dairy products,” Crewther said.

“This underscores the importance of New Zealand continuing to invest in efforts to remove trade barriers, including those that remain for dairy in some free trade agreement partner markets.

“Fewer trade barriers would mean a greater diversity of export opportunities for New Zealand dairy companies and greater ability to navigate market volatility.”

The report said the dairy industry’s productivity would be enhanced by improved infrastructure resilience.

“There is a significant economic benefit associated with alleviating the costs arising from infrastructure vulnerability and trade barriers,” Crewther said, adding that even short-term road closures were costly.

Rail reliability was also a priority, with rail access to the Port of Tauranga, which handled about 53 per cent of dairy exports, reliant on a single rail line.

Dairy’s contribution to New Zealand’s economy

• Dairy generates $25.7 billion in exports - one in every four export dollars New Zealand earns.
• Exporting success has supported the dairy sector to continue growing its economic contribution, delivering $11.3 billion in value-add to the economy in the year ending March 2023.
• The dairy sector employs almost 55,000 people and generated $3.6 billion in wages in 2023.
• In Waimate, one in three jobs are in the dairy sector, while wages paid by dairy made up 52 per cent of total wages paid in the district. Dairy employs more than 20 per cent of workers in both South Taranaki and Westland districts and pays over 40 per cent of the district’s total wages.
• Dairy accounts for more than 1 in 10 jobs in a further eight districts while paying more than comparable sectors, which amplifies the value of dairy employment to communities.
• New Zealand dairy exports continue to incur an estimated $1.5 billion in tariff and $7.8 billion in non-tariff measures costs.

- RNZ with additional reporting from The Country