Case study
Return on Investment for the New Zealand Dairy Sector
Independent economic evaluation of the DairyNZ milksolids levy
Client: DairyNZ
Region: Australasia (New Zealand)
Year: Multiple evaluations across levy periods
Prime Consulting Role: Economic evaluation, cost benefit analysis, risk modelling, investment impact assessment
Specialist Division: Nimmo-Bell & Associates (a division of Prime Consulting)
Overview
For New Zealand dairy farmers, the milksolids levy represents a collective investment in the future of the sector. Ensuring that this investment delivers clear, measurable value is essential for maintaining farmer confidence, regulatory credibility and long term industry resilience.
Prime Consulting, through its economics and finance division Nimmo-Bell & Associates, was commissioned by DairyNZ to independently evaluate the return on investment delivered by levy funded programmes. The work focused on whether industry good investments were generating tangible economic benefits, reducing risk and strengthening the sector’s licence to operate.
These evaluations provided an evidence based assessment of value across research, biosecurity, environmental compliance, farm systems innovation, workforce capability and policy advocacy, translating complex programme impacts into clear financial outcomes for farmers and decision makers.
The challenge
DairyNZ invests levy funds across a wide range of long term initiatives, many of which deliver benefits that are not immediately visible at farm level. Productivity gains, avoided regulatory costs, biosecurity protection and environmental compliance benefits often accrue over time and are difficult to quantify.
The challenge was to move beyond high level narratives and provide robust, independent proof that levy funded activities were delivering value for money. This required analysing complex systems, isolating programme impacts, accounting for risk and uncertainty and testing outcomes against realistic counterfactual scenarios.
The findings also needed to stand up to scrutiny from farmers, industry leaders, regulators and government agencies, particularly in the context of levy continuation votes.
The approach
Prime Consulting applied a rigorous investment lens to the evaluation, treating farmer levies with the same discipline expected of commercial capital. Nimmo-Bell & Associates led the economic analysis, using methodologies aligned with New Zealand Treasury guidance and best practice cost benefit frameworks.
The approach combined quantitative modelling with practical industry insight. Cost benefit analyses were undertaken across multiple levy funded investment areas, supported by Monte Carlo simulations to test risk adjusted outcomes and probability confidence. Counterfactual scenarios were developed to assess what would have occurred in the absence of levy investment.
Farmer panel validation sessions and board level workshops ensured assumptions were grounded in real world farming conditions. This collaborative process helped translate technical economic outputs into findings that were credible, transparent and accessible to the sector.
Delivery and outcomes
The work delivered two independent, comprehensive return on investment assessments for the DairyNZ milksolids levy. Each evaluation provided a clear line of sight between levy expenditure and measurable economic outcomes.
Key outputs included:
Industry wide cost benefit models covering multiple strategic investment programmes
Risk adjusted cashflow modelling with probability based outcomes
Independent attribution of benefits and avoided costs
Scenario testing to demonstrate resilience under changing regulatory and market conditions
Clear, farmer focused reporting to support levy continuation decision making
The analysis demonstrated that levy funded initiatives generated significant net benefits for the sector, far exceeding the cost of the levy itself. Importantly, it showed that many of the largest benefits came from risk mitigation, including avoided compliance costs, biosecurity protection and safeguarding the sector’s social licence to operate.
Why it worked
The evaluation succeeded because it combined technical economic rigour with deep sector understanding. Prime Consulting brought a problem solving mindset, focusing not just on whether value existed, but how it was created and sustained over time.
A nimble, low bureaucracy approach allowed the team to adapt modelling as new data emerged and respond quickly to stakeholder feedback. Strong relationships with industry participants ensured trust in both the process and the findings.
By covering the full evaluation lifecycle, from framework design through to farmer facing reporting, Prime Consulting provided DairyNZ with a single, accountable partner and a clear, defensible evidence base.
Impact at a glance
Independent confirmation that the milksolids levy delivers strong positive returns to farmers
Quantified evidence of productivity gains and avoided regulatory costs
Risk adjusted modelling demonstrating resilience under multiple future scenarios
Clear economic justification supporting levy continuation
Strengthened confidence in DairyNZ’s investment strategy and governance
Reinforced licence to operate for New Zealand’s dairy sector