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Dairy contribution to New Zealand economy in decline

Xinhua, June 10, 2016 Adjust font size:

The decline in New Zealand's pillar dairy industry over the last two years was laid out in detail Friday, with the government statistics agency showing how the plunge in global commodity prices had diminished its importance to the national economy.

The value of exported dairy products had dropped by 1.5 billion NZ dollars (1.06 billion U.S. dollars), or 37 percent, between the December 2013 quarter and the March 2016 quarter, said a statement from Statistics New Zealand.

The lower export value was driven largely by price, as the volumes of milk products exported had remained relatively steady.

While the percentage of New Zealand's annual export value that came from dairy had generally increased over the last decade, it dropped from 32 percent to 26 percent in the most recent year from 2014 to 2015.

Most of New Zealand's dairy product exports were sold by farmer-owned cooperative Fonterra.

Its forecast payout to farmers for the 2016-2017 dairy season was currently 4.25 NZ dollars (3.02 U.S. dollars) per kilogram of milk solids -- well down from the peak of 8.40 NZ dollars (5.96 U.S. dollars) in the 2013-2014 season.

According to the industry's Dairy NZ organization, the price should be 5.25 NZ dollars (3.73 U.S. dollars) for the average New Zealand dairy farm to break even.

"The prices dairy cattle farmers receive (the output prices) are at a nine-year low. They have fallen by more than half since the recent peak in 2014," said the statement.

With low payouts to farmers due to weak international demand and increasing global supply, the number of New Zealand dairy cattle fell by 3 percent to 6.5 million in 2015 -- the first drop since 2005.

Tourism overtook dairy as New Zealand's biggest export earner last year. Endit