New Zealand's Dairy Industry in 2023

New Zealand remains a pivotal force in the global dairy sector, backed by a robust infrastructure for its extensive dairy operations. The country manages a dairy herd of approximately 5.1 million cattle, leading to an annual production of 21.4 billion liters of milk. Advanced processing facilities are crucial in handling this output, with a capacity of up to 20 billion liters per year.

Dairy Production and Export

New Zealand is on track to produce 375,000 tons of cheese by 2024 and generates 1.5 million tons each of milk powder and whey annually. The country plays a significant role in the global dairy market, contributing 35% to global milk powder exports, totaling 4.6 million metric tons. In 2023, the value of dairy exports was approximately NZ$18.2 billion, with 95% of products exported primarily to Asian and Middle Eastern markets. However, exports to the United States are subject to 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. Notable developments include Westland Milk Products' acquisition of a 60% stake in Pure Nutrition for NZ$31.1 million and Fonterra's NZ$150 million investment in a new UHT cream plant.

Economic Impact and Farmgate Prices

Dairy significantly contributes to New Zealand's economy, with current season milk prices expected to add approximately NZ$15 billion. The Farmgate Milk Price remains stable at NZ$10.00 per kgMS. In regions like 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, including inflation-driven cost increases, a downturn in the butter business, and potential labor shortages due to visa expirations. 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 emphasizes food safety and plant protein production. The country aims to double its dairy export value by 2034, focusing on diversification and sustainability. Nestlé is financing the first commercially viable Net Zero dairy farm in New Zealand to target 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.

Future Outlook

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, which could significantly reduce agricultural methane emissions. Fonterra is exiting consumer-facing business segments to concentrate on ingredients, leading to the sale of its assets to Lactalis.

Increased dairy production leading to price declines. The decline in prices is attributed to increased production in major regions like New Zealand.

Modified: 2026/01/19