New Zealand Dairy Exports Projected to Grow Significantly by 2030
The Ministry for Primary Industries (MPI) anticipates New Zealand's dairy export earnings to climb to $31 billion by the year 2030. This projection is part of the latest Situation and Outlook Report for Primary Industries (SOPI), which highlights the importance of dairy as a cornerstone of the country's export economy. Currently, dairy products represent 47% of New Zealand's total primary export earnings and almost one-third of overall exports.
In the year leading up to June, dairy exports were valued at $28.6 billion, marking a 5% increase compared to the previous year's record figures. Ray Smith, the director-general of MPI, emphasizes that there is significant potential for further growth. He notes that many areas in New Zealand have yet to reach their full productive capacity.
An initiative worth $2.6 million has been launched to improve land-use flexibility, particularly focusing on Māori landowners. This program aims to enhance productivity through a combination of scientific, technological, and regulatory reforms, as well as the adoption of better farming methods. Smith highlights that advancements such as improved genetics and wearable technology can lead to higher returns from the land.
Despite favorable seasons boosting milk solids production to a record 2.02 billion in the past year, the SOPI report predicts a slight decline in returns in the upcoming season. This is attributed to tighter margins and a forecasted dry season influenced by El Niño conditions. However, MPI expects a rebound in the following three years.
The global milk supply remains a key factor influencing dairy prices. The report points out that milk production in the United States increased by 3.3% over the past year, with the cow herd reaching its highest numbers since the 1990s. Additionally, milk production in the European Union has shown recovery.
Interestingly, the report notes that the 5% growth in dairy export revenue was achieved with only a 1% increase in export volumes. Significant growth was observed in specific dairy categories such as butter, AMF, cream, and cheese, with whole milk powder exports rising by 11% to $9.1 billion.
Looking ahead, MPI predicts a farmgate milk price of $9.85 per kilogram of milk solids. However, this forecast is tempered by concerns that geopolitical tensions in the Middle East could push up key farm input costs, including fuel, fertilizer, and freight.
