New Zealanders aren't just outnumbered by their sheep. There are now more dairy cows in the country than people.

New Zealand's human population may be growing at a reasonable rate of 0.9%, just behind that of the US.

But, at 4.39m, they have fallen some 10,000 behind the national dairy cow herd, which has expanded by nearly one-third so far this millennium, as the country has expanded into the world's top dairy exporter.

Such growth has left New Zealanders with plenty to be grateful to milk for, at least according to a report commissioned by the Fonterra co-operative, the country's main dairy group.

Taxes to mortgages 

The industry accounts for 26% of New Zealand's goods exports, with dairy shipments hitting NZ$10.4bn last year, and keeps 35,000 directly employed, plus a further 10,000 contractors.

Fonterra's increase of NZ$1.17 per kilogramme of milk solids in its payout to farmer members "will generate an extra NZ$316 per person in New Zealand".

It pays "substantial" taxes and, through narrowing the country's current account deficit, reduces interest payments on overseas funds and lowers mortgage rates.

"There is no doubt that dairy has helped us out of the recession, and the benefits extend well beyond the farm gate," Fonterra chief executive Andrew Ferrier said.

Whether the collapse in dairy prices in 2008-09 worsened New Zealand's economic woes did not show up in the report.

Cows vs ewes 

And, indeed, there have been some losers to the rise of dairy, including the sheep industry for which New Zealand was once renowned.

While the country still has roughly 10 sheep for every person, the proportion was 20 in the early 1980s, when New Zealand lamb was a staple export.

Official data released showed the country's annual lamb crop at 25.1m, down nearly 2.8m head on that the spring before, a fall due to poor weather this year as well as reflecting a long-term decline, fuelled by a switch to dairy.

Both industries are united, however, by the fight against drought which is besetting northern parts of New Zealand for a second season.

Agriculture Minister David Carter on Wednesday declared parts of North Island a medium-level drought zone, terming the situation "serious".

"Farmers are still recovering from last summer's drought and they're now facing it all over again, weeks earlier than expected," Mr Carter added.