New Zealand's Dairy Industry in 2023

Milk Production and Processing

New Zealand is home to approximately 5.1 million dairy cattle, with an annual milk output of around 21.4 billion liters. The country's dairy sector has a processing capacity of about 20 billion liters per year. Cheese production is expected to reach 375,000 tons by 2024, while milk powder and whey production remain significant at 1.5 million tons each annually. New Zealand contributes significantly to global milk powder markets, accounting for 35% of exports with 4.6 million metric tons.

Key Enterprises

Leading companies such as Fonterra, Synlait Milk, Westland Milk Products, Yili, Bright Dairy, and Pure Nutrition are instrumental in advancing the sector. The efforts of privately-owned farms and the Organic Dairy Hub also play pivotal roles in the industry's growth.

Export and Import Dynamics

In 2023, New Zealand's dairy exports were valued at approximately NZ$18.2 billion, with 95% of its dairy products exported globally. The country targets markets such as Asia and the Middle East, despite facing a 10% export tariff in the U.S. market.

Significant Industry Events

Notable developments include inflation-driven cost increases impacting companies like Synlait Milk and reduced support from Bright Dairy. Westland Milk Products acquired a 60% stake in Pure Nutrition for NZ$31.1 million. Fonterra is investing NZ$150 million in a new UHT cream plant in Southland, and Lactalis expanded its presence with a NZ$3.4 billion acquisition of Fonterra's brands in New Zealand.

Challenges and Opportunities

Challenges such as downturns in Fonterra's butter business and potential labor issues from expiring migrant worker visas exist. However, New Zealand's competitive edge ensures dairy returns exceed production costs. High butter prices contribute to premium sales, strengthening the national economy.

Economic Impact

The current season's milk price contributes about NZ$15 billion to the economy, with a stable Farmgate Milk Price of NZ$10.00 per kgMS. Taranaki's GDP per capita ranks third highest in New Zealand at $85,362 as of March 2024, with dairy exports surpassing oil and gas earnings.

Future Outlook

Increased farm sales, particularly in Southland and Canterbury, indicate renewed confidence in the sector. Fonterra's investment in its Eltham plant aims to enhance cheese production by 20,000 tonnes annually. Pāmu targets over $100 million in operating profit by 2030, more than doubling its current figures.

Leadership Changes

Notable leadership changes include Andy Macfarlane stepping down from Fonterra's board after eight years. Synlait faces board instability with strategic and financial challenges, including a declining share price and leadership disagreements.

Innovations and Environmental Concerns

New Zealand advances in food safety and plant protein production while addressing environmental challenges like nitrate and E. coli contamination. The government is investing over $400 million in methane mitigation tools, aiming for 11 commercially available options by 2030.

Strategic Developments

New Zealand aims to double its dairy export value by 2034, focusing on diversification and sustainability. The government projects a 12% growth in agri-food export revenues and a 16% increase in the dairy sector, reaching NZ$27 billion.

Labor and Employment

The dairy sector contributes over 7% to New Zealand's GDP, employing around 41,000 people with a heavy reliance on international workers due to labor shortages. The country's milk cooperative, owned by approximately 10,500 farmers, controls nearly a third of the world's dairy trade.

Investments and Approvals

Fonterra plans a $75 million investment to expand butter production at its Clandeboye site, part of a strategy to invest up to $1 billion to enhance efficiency and shareholder returns, increasing butter production capacity by 50,000 metric tonnes annually.

Trade Relations

New Zealand is negotiating a free trade agreement with India, focusing on agri-tech sharing and dairy market access. The country is working to facilitate the movement of skilled professionals and improve dairy product access.

Market Growth

smaXtec reports substantial double-digit growth expected in 2025. Milk prices in New Zealand exceed those in Australia, influenced by competition and global market pressures. The FAO Dairy Price Index decreased by 3.4% due to high milk production impacting prices.

Innovation in Sustainability

Nestlé is financing New Zealand’s first commercially viable Net Zero dairy farm, targeting a 30% emissions intensity reduction by 2026-27 and achieving net zero emissions within a decade.

Supplier of Over 50% of China's Dairy Imports

New Zealand supplies more than half of China’s dairy imports, with significant investments from Fonterra to expand product offerings in China. Stable trade relations support A2 Milk's investments in China.

Dairy Cow Prices Surge

Dairy cow prices in New Zealand have surged by 50%, exceeding $3,000 per cow, driven by high milk payouts, increased beef demand, and stock shortages.

Regulatory Challenges and Environmental Issues

The government emphasizes improving sustainability through farmer empowerment, addressing regulatory challenges faced by the dairy sector.

Holistic Disease Control

New Zealand veterinarians advocate for holistic disease control to combat antimicrobial resistance. Antibiotic sales have dropped nearly 50% since 2017, highlighting successful collaboration between veterinarians, farmers, and regulatory bodies.

Dairy Export Dynamics

New Zealand's dairy exporters benefit from a weak NZD and high global demand for grass-fed products, capitalizing on favorable exchange rates ranging between 54.85 and 61.2 US cents. The use of beef genetics in dairy cows is increasing, with an 18% rise in beef straws used this spring compared to last year.

Modified: 2025/11/20