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Statistics Confirm the Growth and Importance of Dairy Farming

The national dairy herd has increased to 5.3 million cattle as at 30 June 2002 according to New Zealand's latest agricultural census. The provisional results released today by Statistics New Zealand, show that since 1999 total dairy cattle numbers have risen 23 percent and the milking herd has risen 18 percent to 4.0 million.

MAF Senior Analyst Tony Wharton says that the 2002 Agricultural Production Census figures confirm the extent of dairy expansion over recent years. The Ministry is expecting continued growth in national dairy cattle numbers over the next few years. Mr Wharton says that a lower annual rate of growth is expected, however, as farmers respond to lower payouts compared with the higher payouts in recent seasons.

The expansion of the dairy herd in recent years reflects the improved profitability of dairying over other types of pastoral farming and the opportunities created by irrigation. For example, MAF's 2002 Farm Monitoring publications show that the 2001/02 weighted average economic farm surplus for the dairy farms surveyed was $1,877 per hectare compared to $229 per hectare for the sheep-and-beef farms.

New Zealand's dairy processing industry has also expanded strongly over the past few years on the back of the rising milk supply. Dairy products earned $7.1 billion dollars and accounted for 23 percent of New Zealand's export income for the year to June 2002. The dairy industry, including downstream activities such as marketing, wholesaling and transport, contributes an estimated 7 percent to the New Zealand economy, as measured by GDP.

While the dairy industry is predominantly based in the North Island, with approximately three-quarters of the milking herd located there, the Ministry of Agriculture and Forestry estimates that about 40 percent of the recent increases in cow numbers have taken place in the South Island.

"The growth in South Island dairying has occurred largely through conversions of sheep-and-beef and cropping farms in response to low land prices, high per-cow production, and access to irrigation," says Mr Wharton.

In contrast to the growing dairy herd, the sheep population has declined from 45.7 million in 1999 to 39.2 million head. MAF estimates that the dairy cattle proportion of total stock units* increased markedly since 1999. Dairy cattle now comprise 36 percent of total stock units compared to 29 percent in 1999. This increase has been mainly at the expense of sheep, which have fallen from 43 percent of stock units in 1999 to 37 percent in 2002.

The 2002 Agricultural Production Census is the first to be held since 1994 and provides important information on what has been happening in the agricultural, forestry and horticultural sectors in recent years. Final statistics from the census will be released in May of this year, including detailed data at regional and district level, and additional information on farm types, forestry and land use.

Farm Expenses Price Index Unchanged

The Farm Expenses Price Index showed no change in the December 2002 quarter compared with a 0.5 increase in the September 2002 quarter, according to Statistics New Zealand. This follows 13 consecutive quarterly increases since the September 1999 quarter. On an annual basis, farm input prices rose 3.6 percent from the December 2001 quarter to the December 2002 quarter.

Excluding livestock, input prices rose 0.6 percent in the December 2002 quarter. The most significant upward contribution came from local and central government rates and fees, which rose 4.4 percent in the December 2002 quarter. This was mainly due to property revaluations in some areas.

The most significant downward contribution to farm input prices this quarter came from a 3.0 percent decrease in the livestock purchases index, reflecting lower prices for deer, cattle and calves. This is the second consecutive fall in the livestock purchases index, following a fall of 1.0 percent in the September 2002 quarter.

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