Dairy cows are doing their bit for employment in the Bay of Plenty with 3200 people in work directly owing to the dairy industry.

As well as benefiting the labour force; regional dairy production was worth $605 million in 2009 and dairy revenue was $254 million in the Rotorua district.

These figures are from an independent report by the New Zealand Institute of Economic Research released on Wednesday.

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The report shows the money from milk flows right through the economy starting at the farm gate and moving out to rural and urban communities.

Fonterra CEO Andrew Ferrier says the report, commissioned by Fonterra and DairyNZ, enables New Zealanders to better understand that when dairy does well, New Zealand does well.

'Most people understand dairy is a key export industry,” says Andrew.

'Now they can understand what it means for them as the report accurately quantifies, for the first time, the tangible benefits to both rural and urban communities.”

An increase of $1 to Fonterra's payout boost real incomes by about $270 for every person in New Zealand, showing everyone benefits when the company does well.

From the $7.5 billion farmers received in 2009, $3.6 billion was spent on domestically produced goods, including fertiliser, feed, agricultural services and financial services.

'There is no doubt that dairy has helped us out of the recession and benefits extend well beyond the farm gate.

'Export growth from the dairy sector has helped narrow the current account deficit and that helps everyone through lower interest rates on mortgages and other borrowings.”

NZIER deputy chief executive John Ballingall says the dairy sector has delivered significant and ongoing benefits to the New Zealand economy.

He says the sector's strength has been evident as New Zealand recovers from the global financial crisis and domestic recession.

'Given anaemic domestic demand, the export side of the economy has been relied on to generate economic growth and dairy has made a significant contribution.”

DairyNZ chief executive Dr Tim Mackle says the sector contributes for 26 per cent of New Zealand's total exports and it is looking to grow its contribution to the country.

He says the challenge for dairying will be how to continue to grow the industry in a sustainable way.