Dairy NZ

What is industry good?

An industry good activity has been defined as an activity which:

• Is financially beneficial to New Zealand dairy farmers
• Would not be undertaken by individuals or groups of dairy farmers because either 1) It is too expensive for them to do on their own or 2) the benefits could not be captured by those making the investment.

History of the levy on milksolids

Historically, industry good activities were undertaken on behalf of dairy farmers by the New Zealand Dairy Board. When Fonterra was created and the Dairy Board activities disestablished in 2001, it was agreed that these industry good activities should continue for all dairy farmers.

This resulted in the creation of two independent organisations, Dairy InSight and Dexcel, which acted as funder and provider of industry good until the formation of DairyNZ in November 2007.

The levy was first introduced in June 2003 following a dairy farmer vote in May 2002. Since then the levy has been collected under the terms of the Commodity Levies Act 1990. Through this levy, farmers invest in much of the work carried out through DairyNZ.

Who pays the levy?

All dairy farmers who produce milk from cows that is supplied to a dairy company will pay the levy. This includes all dairy farmers, sharemilkers, and dairy farm leaseholders.

How is the levy calculated?

The levy is calculated on the quantity of milksolids supplied to your dairy company.  For example, the average dairy farm that milks 376 cows will pay the following:

376 cows x 327 MS = 122,952 MS x Annual Levy 3.6 cents = $4,426 (+ GST) per year

How are investment decisions reached?

DairyNZ's role is to invest farmers levy money to ensure it generates maximum returns for them. This includes securing funding from other sources where appropriate to further leverage farmers' investments.

Investment decisions are made according to the priority areas DairyNZ believes will have the biggest impact, such as feed, environment, labour productivity, farm business and animals. The major investment decisions are ultimately made by the DairyNZ Board of Directors following recommendations by the DairyNZ senior management team and internal and external experts.

Are dairy industry good activities funded solely by the milksolids levy?

DairyNZ accesses alternative sources of funding through other public and private institutions and organisations and collaborates with them to implement key research programmes that will deliver positive returns to farmers.

An independent analysis shows that co-investors such as government have contributed more than $2 for every dollar of dairy farmer levy investment.

How are investments monitored?

On an ongoing basis DairyNZ has new processes in place to ensure:

• The levy was spent on the right things
• That the work paid for by the levy was done, and
• That the work provided a worthwhile result to farmers for their investment.