New Zealand's Dairy Industry in 2023

New Zealand continues to play a pivotal role in the global dairy sector, supported by a robust infrastructure for its extensive dairy operations. The country's dairy herd consists of approximately 5.1 million cattle, producing an impressive 21.4 billion liters of milk annually. Advanced processing facilities complement this substantial production capacity, capable of handling up to 20 billion liters of milk per year.

Dairy Production and Export

New Zealand is on track to produce 375,000 tons of cheese by 2024, alongside an annual generation of 1.5 million tons each of milk powder and whey. The nation significantly influences the global dairy market by contributing 35% to global milk powder exports, totaling 4.6 million metric tons. In 2023, the value of dairy exports reached approximately NZ$18.2 billion, with 95% of products exported mainly to Asian and Middle Eastern markets. However, exports to the United States face a 10% tariff.

Key Enterprises and Market Dynamics

The industry is dominated by major companies such as Fonterra, Synlait Milk, Westland Milk Products, Yili, Bright Dairy, and Pure Nutrition. Noteworthy developments include Westland Milk Products acquiring a 60% stake in Pure Nutrition for NZ$31.1 million, and Fonterra investing NZ$150 million in a new UHT cream plant.

Economic Impact and Farmgate Prices

Dairy is a significant contributor to New Zealand's economy, with milk prices in the current season expected to add approximately NZ$15 billion. The Farmgate Milk Price remains stable at NZ$10.00 per kgMS. In Taranaki, dairy exports have surpassed revenues from oil and gas, supporting the third-highest GDP per capita in the country.

Challenges and Opportunities

The industry faces challenges such as inflation-driven cost increases, a downturn in the butter business, and potential labor shortages due to visa expirations. Nonetheless, the sector maintains its competitive edge, with premium butter prices and returns exceeding production costs being beneficial. The government is investing over NZ$400 million in methane mitigation tools, aiming for 11 commercially available options by 2030.

Environmental and Technological Innovations

Addressing environmental concerns like nitrate and E. coli contamination, New Zealand focuses on food safety and plant protein production. The country aims to double its dairy export value by 2034, emphasizing diversification and sustainability. Nestlé is financing New Zealand's first commercially viable Net Zero dairy farm, targeting significant emissions reductions.

Labor and Employment

The dairy industry accounts for over 7% of New Zealand’s GDP, employing around 41,000 people. Due to labor shortages, the sector relies heavily on international workers. Fonterra, a cooperative owned by approximately 10,500 farmers, manages nearly a third of global dairy trade.

Strategic Developments and Investments

Fonterra plans to invest up to NZ$1 billion to enhance efficiency, including a NZ$75 million expansion in butter production. The country is also negotiating a free trade agreement with India to improve dairy market access and facilitate the movement of skilled professionals.

Animal Wellbeing and Sustainability

New Zealand's dairy industry emphasizes animal wellbeing, utilizing wearable technology to enhance cow wellbeing metrics. The Competitive Farm Systems - Frontier Farms project underscores this focus as vital for future competitiveness.

Impact of 24-Month Calving Intervals

A study investigates the effects of a 24-month calving interval on dairy cows to reduce labor peaks and increase profitability. This trial is conducted at DairyNZ’s Scott Farm in Hamilton and is expanding to include commercial farms.

Waiū Dairy and Māori-owned Dairy Processors

Waiū Dairy faces financial difficulties amidst broader challenges encountered by independent Māori-owned dairy processors in New Zealand, which compete against larger multinational corporations. The industry is also addressing the effects of heat stress on cows due to climate change, posing a significant risk to milk production and animal welfare.

Fonterra's Environmental and Production Efforts

Fonterra's site in Eltham, Taranaki, is undergoing significant upgrades to expand cheese production capacity to meet international demand, including supplying to McDonald's. As New Zealand's largest greenhouse gas emitter, Fonterra's emission reduction initiatives are crucial, given its substantial role in the country's overall emissions.

Lactalis' Acquisition of Fonterra

Lactalis has recently acquired New Zealand-based dairy cooperative Fonterra, with the acquisition valued at approximately £2.4 billion in sales, indicating Lactalis' intent to expand its global dairy operations.

Legislative Changes

New Zealand's government has officially repealed the longstanding Resource Management Act (RMA). The introduction of three new legislative measures aims to streamline environmental regulations and boost the efficiency of the dairy sector. The new laws include the Natural and Built Environment Act (NBA), the Spatial Planning Act (SPA), and the Climate Change Adaptation Act (CCAA).

Technological Advancements

New Zealand-based Radix Nutrition has unveiled a pioneering AI-driven platform that transforms its approach to product formulation. Radix Nutrition's new technology has enabled the company to launch upgraded products, including freeze-dried breakfast cereals, protein powders, and smoothies.

New Zealand reported strong supply growth, similar to the United States, with a notable increase in milk collections contributing to the global supply surge. India imports over 90% of its whey protein from countries such as New Zealand. In the fiscal year 2022–23, India imported more than 45,000 tonnes of whey protein concentrate and isolates, valued at over ₹1,200 crore (approximately $145 million).

New Zealand's food and fibre exports are projected to reach a record $62 billion in 2026, with dairy exports contributing a 1% increase. The dairy sector remains a pivotal part of the nation's agricultural economy. The food and fibre sectors collectively contribute approximately 83% of New Zealand’s goods exports.

New Zealand's $18 billion dairy export market is threatened by precision-fermented milk. Dairy products constitute 30% of New Zealand's merchandise exports, with agricultural methane emissions accounting for about half of the country's total greenhouse gas emissions. The shift to precision fermentation could reduce these emissions significantly.

Fonterra, headquartered in New Zealand, is exiting consumer-facing business segments. Fonterra announced its intention to exit consumer-facing business segments to concentrate on ingredients, leading to the sale of its assets to Lactalis.

New Zealand's agribusiness is a significant focus for investment. Steven Adams has invested in a large-scale dairy and avocado farm on a New Zealand island, highlighting the country's agricultural potential.

New Zealand faces challenges with an expected decline in milk production by 0.5%. The reduction is attributed to a decrease in cow numbers.

Modified: 2025/12/30