What guides DairyNZ's investment?

Dairy Tomorrow is our strategy and roadmap to the future. This was developed by partners representing the dairy sector – DairyNZ, Dairy Women’s Network, Federated Farmers and Dairy Companies Association of New Zealand.

This is what guides DairyNZ’s investment.

Where is the levy spent?

DairyNZ’s work includes research and development to create practical on-farm tools, leading on-farm adoption of good practice farming, promoting careers in dairying and advocating for farmers with central and regional government.

Investment through the levy has delivered a wide range of benefits that far outweigh the costs. Farmers' return on investment is at least $15 for each $1 paid through the levy.

For every dollar of levy investment:

Examples of work

Farm systems resilience

• Consulting officer network
• Demonstration and research farm funding
• Farm Planning, DairyBase and Mark & Measure
• Field days, discussion groups and workshops
• Information, tools and templates

Protect and nurture the environment

• Dairy Action for Climate Change
• Advocacy around proposed policy changes
• Pastoral Greenhouse Gas Research Consortium
• Catchment water quality case studies
• Farming with limits and environmental readiness project

Research and development

Current projects include:

• Cow fertility, lifetime productivity, NZAEL database, low N livestock
• Forages for Reduced Nitrate Leaching, hybrid ryegrass breeding, Forage Value Index, fodder beet, pasture persistence and GM grasses.
• Variable milking times e.g. 3in2

Build great workplaces for NZ's talented workforce

• Workplace design and injury reduction
• Input into immigration, vocational education and training policies
• Training for staff and leadership development
• Attracting talent into the industry

Biosecurity

• Tb Free programme
• On-farm biosecurity readiness

Leading on-farm animal care

• Early response service for
  at-risk farms
• Bobby calf alternatives
• Southern wintering options

Grow vibrant and prosperous communities

• Building public understanding
• Sponsorship of community groups and events
• Education including Rosie the Cow, school kits and farm visits

How are investments monitored?

DairyNZ has independent auditing process in place to ensure:

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

Review the latest audit report here.

The Milksolids Levy

All dairy farmers who produce milk from cows that is supplied to a dairy company pay a levy. This includes all dairy farmers, sharemilkers, and dairy farm leaseholders. The levy is collected under the terms of the Commodity Levies Act 1990.

• How much is the levy?

  The levy rate has remained at 3.6c/kgMS since 2008. The DairyNZ Board reviews the rate annually based on future investment requirements. The rate will remain at 3.6c for 20/21 too. Any changes to the levy would be communicated well in advance.

• How is the milksolids levy calculated?

  The levy is calculated on the quantity of milksolids supplied to the dairy company.  For example, the average dairy farm that milks 413 cows will pay the following:

  413 cows x 371 MS per cow - 153,223 kg MS x Annual levy 3.6 cents = $5516 (+GST)

• How much is raised through the levy each year?

  Around $67 million is collected from New Zealand dairy farmers each year through the levy. 

• Who decides how the levy money is invested?

  An eight member board of directors (five farmer-elected and three independents) decide how DairyNZ invests the levy money that is collected each year. The board’s decision-making is supported by advice from DairyNZ’s senior leadership team.

• How are investments monitored?

  DairyNZ has auditing and reporting processes in place to show farmers:

  • Where the levy was spent
  • That the work paid for by the levy was done, and
  • That the work provided a worthwhile result to farmers.

  The latest audit report is available here.

• What’s my return on my levy investment?

  Your investment through the levy has delivered a wide range of benefits that far outweigh the costs. An independent economic evaluation was done on DairyNZ's investment across key areas and projects.

  The resulting benefits or return on investment for each area were captured in a variety of ways; improved productivity, increased profitability, reduced costs, better efficiencies and anticipated benefits through lower imposed taxes.

  When you add these benefits together your return on investment is at least $15 for each $1 paid through your levy.

  Examples of some of the projects analysed

  Focus area	Benefits
  Environmental advocacy and mitigation	More profitable farms, reduced tax implications, reduced N leaching
  Genetic value	Productive value per animal; reduced culls and disease
  Forage value	Improved selection and increased pasture harvest/ha
  Biosecurity	Avoid potential trade restraints, reduced cost of herd movements and management and culls/lost production.
  Farm systems	Increased profitability by supporting on-farm change
  Workplace improvements	Higher skills and lower fatalities and injuries.

  Environmental advocacy and mitigation

  Using robust scientific evidence and economic impact analysis, DairyNZ have been able to influence the Zero Carbon Bill by splitting out animal methane for separate consideration. The amount of money saved by dairy farmers in reduced compliance costs and direct tax as a result of DairyNZ scientific evidence has been estimated to be in the magnitude of 99 times the investment.

  Dairy animal genetic gain

  Levy investment in NZAEL (New Zealand Animal Evaluation Ltd) to drive genetic gain in dairy animals has provided an estimated 10 percent of the increase in economic value of $9.70 per dairy cow per year. For the average herd of 414 cows – that correlates to $4015 per year in improved profits from higher performing cows that all New Zealand dairy farmers enjoy as a result of genetic gain (and 22 times return of DairyNZ levy investment).

  Forage value

  The ryegrass Forage Value Index (FVI) was a major undertaking with the objective of providing farmers with a selection tool to allow more informed and profitable decisions when choosing ryegrass cultivars for their pasture renewal programme. The perennial ryegrass FVI are calculated based on the seasonal DM yield traits using cultivar-specific data as well as trait information on seasonal metabolisable energy (ME) content and persistence traits. It is estimated that farmers who selected 5-star cultivars, over a 4-star alternative, will gain an average of $173 in value per hectare per year in profit through better yields, higher ME and greater persistence. Economic analysis suggests a 26-times return on levy investment.

  Biosecurity

  The ongoing investment into Tb control in New Zealand has provided a raft of benefits to the dairy sector. These include the impact of trade constraints and reputational damage, reduced cost of herd management and controls, better farmer welfare and costs around culling and disposing of infected cattle. Avoiding these costs has saved an estimated five times the amount of levy invested over the past five years.

  Workplace improvements

  A focus on farmer welfare and investment into health and safety resources has seen ongoing reduction in farm injuries and fatalities. It is estimated that the DairyNZ levy investment into injury reduction has returned a five-fold economic benefit to the sector in the five years from 2015 - 2019.

   

• When was the levy introduced?

  The first levy vote was in 2002 and the first milksolids levy was introduced in June 2003 following the disestablishment of the New Zealand Dairy Board when Fonterra was formed in 2001.

  Two independent industry organisations, Dairy InSight and Dexcel, were initially formed. These acted separately to invest the levy on the one hand, and as a provider of dairy industry activities like research and development.

  In November 2007, Dairy Insight and Dexcel amalgamated to form DairyNZ.

For information about schedules for the current financial year please contact info@dairynz.co.nz.