Saturday, December 2, 2023

Freshwater rules to hit dairy hard

Neal Wallace
Economic modelling commissioned by DairyNZ shows the Government’s essential freshwater package will cost the country $6 billion a year by 2050.
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DairyNZ commissioned three studies into the economic impact of the freshwater plan and they found total milk production is forecast to fall by 24%, national exports by 5.2%, or $8.1b, and tax revenue from the sector to halve by $0.5b.

Two of the studies are independent and all three have been peer reviewed.

With the Zero Carbon Bill and its assumed reductions in methane considered alongside the Essential Freshwater reforms, the analysis forecast an additional $1b loss, taking the total cost to $7b, and another 4% reduction in milk production.

DairyNZ chief executive Tim Mackle says there are alternatives to improve water quality which are less economically damaging, and which will be included in their submission.

“The proposed freshwater changes would result in significant declines in milk production and is therefore a serious threat to the international competitiveness of New Zealand’s dairy sector.

“However, water quality and emissions gains can still be made with less stringent reforms, at a lesser cost to the New Zealand economy.”

Mackle says as proposed the reforms will reduce employment in the sector by between 15 and 20% with Southland, Taranaki, Marlborough and West Coast the most affected.

The reports forecast that by 2050, GDP in Southland could fall by up to 3.6%, Taranaki by up to 2.9%, Marlborough by up to 3.2% and the West Coast by up to 2.9%.

Waikato would also be significantly affected.

“Less milk means 15 to 20% less jobs and reduced competitiveness in global markets.

“This is an issue because nearly one-third of exported goods and 46,000 jobs are associated with dairy production in New Zealand.”

The number of insolvent farms is picked to reach 11% by 2050.

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