1.0 SUMMARY AND CONCLUSIONS
- This analysis is based on the 1976/77, 1981/82 and 1986/87 "Inter-Industry Study of the New Zealand Economy", and on a 1990/91 table estimated by the author. The latter table uses non-survey data sources and it is possible that subsequent survey data will reveal significant errors in some parts of the table. Technical coefficients for agriculture have been adjusted to reflect information about the input structure of farming industries in the early 1990s, and hence are believed to be reasonably reliable.
- Employment, income and output multipliers have all varied significantly over the period 1976/77 to 1990/91. The changes are as great as plus or minus 50%. When the fixed nature of the direct effect is taken into account, it is apparent that the indirect and induced effects vary by even greater percentages. The general trend has been an increase in output multipliers and a smaller increase in employment and income multipliers. In the case of agriculture the trend has been for a large decline in constant price output multipliers (-12 to -39 per cent) but a mixture of rises and falls in current price multipliers. There has also been a decline in most employment multipliers. The exception has been an increase in the "dairy" employment multiplier from 1981/82 to 1990/91. Income multipliers in agriculture have moved in varying ways with significant rises in sheep and horticulture being caused by the decline in product real prices and the consequent decline in farmer incomes.
- There has been a significant increase in output per employee on all farm types over the period 1976177 to 1990/91. Direct employment per unit of output fell by 48% on sheep farms, and by 11% on dairy/beef farms over the period 1981/82 to 1990/91. The small increase in employment per unit of output on dairy/beef farms from 1976/77 to 1986/87 was possibly a result of changes in the relative importance of the two aspects of the industry.
- The decline in direct employment per unit of output does not seem to have been caused by a shift to increased sub-contracting since total1 employment:output ratios (which include labour inputs from supporting industries) have also declined. A short-term exception to this decline was in dairying, where over the period 1981/82 to 1986/87 the decline in on-farm employment was more than offset by an increase in off-farm employment. However, this overall increase has since reversed and by 1990/91 the total employment:output ratio for dairy farming and supponing industries had declined by 10% compared to 1981/82.
- Employment multipliers have generally declined over the period. This decline, combined with the decrease in direct employment on-farm, implies that total employment per unit of output has declined significantly over the period 1976/77 to 1990/91. These declines in total employment are of the order of 30% for dairy/beef, 55% for sheep and 70% for cropping. However, the cropping figure is subject to considerable uncertainty because of changes in classification of mixed farms.
- Multipliers-including-forward-linkages have been very volatile, with this volatility reflecting changes in the disposition of outputs changes in the efficiency of processing industries, and changes in the degree of value added in the processing industry. However, it is estimated that employment (including backward and forward linkages) generated per unit of output (constant prices) has declined by 60% on sheep farms, and 45% on beef and dairy farms over the period 1976/77 to 1990/91. Employment per unit of output generated by forestry and logging appears to have declined by 80% since 1976177.
- Employment per unit of output has declined by 65% in meat processing since 1976/77, and labour productivity has increased even faster in processing than in farming. For every 100 people working in meat processing, the input was supplied by (the equivalent of) 59 (full-time) farmers in 1976/77, 84 farmers in 1981/82, 106 farmers in 1986/87, and 135 farmers in 1990/91.
- Employment per unit has declined by 45 in dairy processing since 1976/77. For every 100 % people employed in dairy processing, inputs were supplied by 278 farmers 1976/77, 319 farmers in 1981/82, 354 farmers in of 1976/77. and 494 farmers output in 1990/91.
- Employment per unit of output has declined by 49% in wool scouring since 1976/77, For every 100 people working in wool scours, inputs were supplied by 820 farmers in 1976/77, 1070 farmers in 1981/82 and 1120 farmers in 1986/87. However, indications are that by 1990/91 inputs were supplied by only 650. In that latter period, a. small change in scouring productivity appears to have been swamped by a rapid increase in sheep-farm productivity with the result that more wool scour workers were required to process the output of a given number of sheep farmers.
- Multipliers have changed very significantly over the last 15 years, particularly as a result of changed labour productivity and changes on farm profitability and hence production functions. Use of old multipliers and employment impacts (even when expressed at constant prices) is likely to provide quite erroneous results. The validity of multipliers suggests that when analysing a particular project reliable results are most likely to be obtained by using some form of project-specific updating, preferably through the incorporation of up-to-date data about the industry in question into the appropriate base table. This can be done by utilising inter-active software such as I07.
1 The sum of direct on-farm and indirect and induced off-farm employment.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
Contact this person
