New Zealand's Dairy Industry in 2023

New Zealand's dairy industry is a crucial component of the nation's economy, celebrated globally for its high-quality dairy products and commitment to sustainable agricultural practices. The sector's innovative approaches and strong international partnerships have solidified its position in global markets.

Production and Processing Metrics

As of 2023, New Zealand boasts approximately 5.1 million dairy cattle, resulting in an annual milk production volume of around 21.4 billion liters. The country's processing infrastructure is substantial, with approximately 20 billion liters of milk processed annually. Cheese production is projected to reach 375,000 tons by 2024, and the production of milk powder and whey is estimated at 1.5 million tons each year.

Key Enterprises in the Dairy Market

The New Zealand dairy sector is home to leading enterprises such as Fonterra, Synlait Milk, Westland Milk Products, Yili, Bright Dairy, and Pure Nutrition. These companies are bolstered by privately-owned farms, Fonterra-affiliated farms, and the Organic Dairy Hub (ODH).

Exports and Imports

In 2023, New Zealand's dairy exports were valued at approximately NZ$18.2 billion, underscoring its significant role in the global market. The country is largely self-reliant with minimal imports, and a 10% export tariff is applicable to the U.S. market.

Significant Industry Events

Inflation has increased operational costs, affecting companies like Synlait Milk and reducing support from Bright Dairy. Westland Milk Products notably acquired a 60% stake in Pure Nutrition for NZ$31.1 million. Fonterra announced a planned investment of $150 million in a new UHT cream plant in Southland. Miraka introduced the first green hydrogen dual-fuel milk collection tanker in the country. Additionally, Fonterra raised its milk payout forecast due to record-high farmgate prices and favorable weather, with a 5.2% increase in milk collections. Strategic alliances, particularly with the UAE, strengthen New Zealand's global trade position, although Greenpeace Aotearoa has criticized Fonterra's use of palm kernel feed.

Global Trade and Relations

New Zealand is a strong advocate for free trade through the WTO and is working to expand its trade with India via FTAs. There has been a noticeable increase in cheese imports from China, and Fonterra has adjusted farmgate milk prices to meet autumn demand. The dairy market is recovering post-COVID-19, despite rising on-farm expenses.

Innovation and Technology

The industry continues to advance through innovation. The Halter company in New Zealand offers virtual fencing technology, providing continuous monitoring of animals' location, health, and fertility status.

Conclusion

Overall, New Zealand's dairy industry remains a global leader, showcasing strong export performance, innovative practices, and strategic international collaborations. The current season's milk price contributes approximately NZ$15 billion to the economy. The stable Farmgate Milk Price of NZ$10.00 per kgMS for the 2024/25 and 2025/26 seasons significantly benefits regional communities. However, domestic consumers face rising prices, with butter leading the surge at a 46.5% increase as of June. The industry contends with rising input costs and global volatility, impacting profitability. Exports have grown by 5% through April, adding US$1.5 billion in value due to a weak dollar and strong demand. Rabobank warns of potential cooling in the second half of the year due to increased supply and global demand fluctuations.

New Zealand has reached an agreement with Canada on the dairy market access dispute under CPTPP, expected to generate up to $157 million per year in export value for New Zealand dairy exporters. The country had initiated formal dispute settlement proceedings in 2022 due to restricted access to the Canadian dairy market.

New Zealand dairy giant Fonterra is facing challenges. Fonterra's downturn in butter business is impacting its financial performance and could affect the broader dairy industry in New Zealand.

Modified: 2025/05/18