New Zealand's Dairy Industry in 2023

New Zealand's dairy industry stands as a cornerstone of its national economy, producing an impressive 21.4 billion liters of milk annually. This substantial output secures New Zealand's status as the largest single-country dairy exporter, contributing over 20% to the global dairy trade.

Key Enterprises and Market Dynamics

The industry's growth is driven by leading companies such as Fonterra, Synlait Milk, Westland Milk Products, and Pure Nutrition. A noteworthy development is Westland Milk Products acquiring a 60% stake in Pure Nutrition for NZ$31.1 million. Fonterra's NZ$150 million investment in a UHT cream plant in Southeast Asia underscores the industry's expansion aspirations.

Challenges and Opportunities

The sector faces challenges including inflationary pressures, a declining butter market, and potential labor shortages. The New Zealand government has allocated over NZ$400 million to mitigate methane emissions by 2030. The industry's strategy includes doubling its export value by 2034 through diversification and sustainable practices.

Environmental and Technological Innovations

New Zealand leads in environmental initiatives, with projects such as Nestlé's Net Zero dairy farm support and the EcoPond system. Technological advancements include wearable farm management technology and trials using almond hulls as cow feed to reduce methane emissions.

Labor and Employment

The dairy sector employs around 51,800 people, heavily relying on international labor. According to a DairyNZ survey, over 80% of dairy farm employees intend to remain in the industry.

Strategic Developments and Investments

Fonterra plans to invest up to NZ$1 billion for operational efficiency, including a NZ$75 million butter production expansion. Trade negotiations with India aim to improve market access, with collaborations between Fonterra and Silver Fern Farms integrating dairy and beef production.

International Trade

New Zealand maintains a strong global dairy trade position, exporting to countries like China, Thailand, and Algeria. Exports surged by 16.5% year on year in June, driven by skim milk powder, cheese, and butter shipments. The United Kingdom's free-trade agreement led to an increase in cheese imports by nearly 2,600 tonnes.

Innovative Product Development

The Moxham family launched a gelato line, aligning with the industry's focus on high-value products. Proliant Health and Biologicals' colostrum processing program signifies ongoing innovation.

Regulatory and Financial Landscape

The revised Dairy Cattle Code of Welfare introduces new standards for farming systems. Financially, the sector thrives, with Pāmu reporting record net operating profits and Fonterra delivering substantial returns to shareholders.

Production and Market Trends

Milk production in New Zealand has reached new heights, surpassing 2 billion kg MS. However, global market dynamics have led to price fluctuations, with recent declines in Global Dairy Trade auctions.

Future Projections

Dairy export earnings are expected to reach NZ$31 billion by 2030, reinforcing the sector's position as New Zealand's largest goods-export category. The USDA projects record cheese exports of 415,012 tonnes by 2025.

Market Regulations

New Zealand is reviewing dairy market regulations, including milk-price monitoring and raw milk sharing requirements. The revised welfare code for dairy cattle, effective April 19, 2027, sets mandatory animal management requirements.

AgriZeroNZ Initiatives

AgriZeroNZ has secured funding to develop methane-reduction technologies on farms, supporting emissions-reduction technologies for New Zealand's grazing systems.

Tatua Co-operative Dairy Company Achievements

The Tatua Co-operative Dairy Company reported a record milk payout after collecting its highest volume of raw milk, with strong demand for culinary creams, aerosol toppings, and long-life dairy desserts.

New Zealand Dairy Industry Awards

The 2027 New Zealand Dairy Industry Awards offer over NZ$1 million in prizes, focusing on professional development and business benchmarking. Regional winners compete for national titles at the National Awards Dinner on May 15, 2027.

Fonterra's Organic Supply Chain

Fonterra’s organic supply chain includes over 100 certified farms in New Zealand’s North Island, with plans to expand to the South Island.

Pāmu Operations

Pāmu manages over 100 pastoral properties, focusing on productivity, pasture use, and herd genetics to boost milk-solids production.

Feed Security Initiatives

New Zealand promotes domestic wheat, barley, and maize as supplementary feed for dairy herds, enhancing feed security and supporting arable farmers.

Research and Development

A study at Lincoln University found that calm behavior in dairy cows was linked to higher milk production. Contracts tied to New Zealand milk prices have remained above the $10-per-kgMS level for three consecutive dairy seasons.

Adverse Weather Events

The government classified extreme weather in Southland and the Clutha District as a medium-scale adverse event, providing tax relief and special payments from the Ministry of Social Development.

Sam Whitelock's Involvement

Sam Whitelock has returned to his family's dairy farm in Manawatu after retiring from rugby, milking 1,500 cows, and serving as an ambassador for Farmstrong, a farmer-wellbeing program.

Kristen Clark's Visit

Kristen Clark will visit New Zealand to explore agricultural-technology centers as part of her research on dairy farm management.

New Zealand Beef Opportunities

New Zealand beef exporters have opportunities in the United States. A NZ$20m Dairy Beef Opportunities initiative aims to increase the value of dairy-origin calves and improve beef supply.

Mainland Dairy Business

The Mainland Dairy business includes former Fonterra Brands operations in New Zealand, featuring Anchor Milk, Anchor Butter, and Mainland Cheese.

Livestock Innovation Farming Transformation Programme

Nine commercial farms across New Zealand are conducting trials under the Livestock Innovation Farming Transformation programme, encompassing various farm types including Māori-owned businesses and family-run farms.

Synlait Milk's Strategic Moves

Synlait Milk is working to restore its pre-pandemic performance by concentrating manufacturing at Dunsandel and maintaining strong retail performance in cheese and butter.

Karioi Solar Farm Project

Fonterra has agreed to a long-term power-purchase agreement for electricity from the planned Karioi Solar Farm, expected to produce about 215,000MWh of renewable electricity annually.

Pāmu's Silver Stabilizer Bulls

Pāmu is preparing to distribute semen from its specially bred Silver Stabilizer bulls, responding to increased demand for lean, grass-fed beef.

Daisy Lab

Daisy Lab, an Auckland-based start-up, produces proteins bioidentical to dairy proteins using precision fermentation, contributing to the sector's technological advancements.

Technological Advancements

Despite productivity gains, New Zealand's dairy output growth is nearing practical limits. The retirement of the 3G network has impacted mobile coverage in rural areas, affecting dairy operations. Women are increasingly involved in managing dairy farms, focusing on environmental stewardship and operational decisions.

A2 Milk and Market Position

A2 Milk, founded in New Zealand, sells milk and infant formula. A2 Milk was founded in 2000 and is involved in reshaping its supply chain with operations including the purchase of Yashili New Zealand.

Global Market Dynamics

Oceania entered October with a more balanced market. Global milk production was still increasing, adding supply, while demand for dairy proteins continued to support prices. New Zealand posted the fastest growth among the six regions. July output averaged 10.5m litres a day, 0.7m litres above the previous year, an increase of 7.4%. The result was attributed to weather, positive margins, and the use of technology.

Waste Incinerator Impact

A proposed waste incinerator in Te Awamutu may affect the dairy industry. Fonterra, a major dairy company, expressed concerns about emissions affecting milk supply chains due to the proposed incinerator.

Dairy Export Growth

New Zealand remains the largest source of whole milk powder exports. New Zealand is expected to record the largest additional exports, at roughly 118,000 tonnes above the 2023–25 average.

IDF Summit Hosting

New Zealand’s third turn as host of the IDF summit will see Auckland hosting the International Dairy Federation’s World Dairy Summit next month.

Currency and Trade Impact

The New Zealand dollar had weakened further and skim-milk powder had become more expensive. The decline in the New Zealand dollar against its US counterpart was around 5%. Skim-milk powder prices at Global Dairy Trade auctions have risen by more than 20%.

Involvement in Dairy Research Initiatives

Ty Wagoner's previous work included joint research with Fonterra’s Research and Development Centre through New Zealand’s Transforming the Dairy Value Chain initiative.

Food Standards Amendments

The Food Standards Australia New Zealand board has approved amendments to the food code. The amendments allow French cultivated-meat startup Parima to use its duck product marketed under the Gourmey brand.

Dairy Goat Co-operative

New Zealand’s Dairy Goat Co-operative has reduced bank debt and raised farmer payments. The Hamilton-based processor accumulated inventory during a multi-year downturn that followed severe trade disruption and temporarily affected about half of its export business.

Export Earnings and Economic Impact

New Zealand’s largest export earner is the dairy industry. Dairy directly supports more than 51,000 jobs in New Zealand and is the country’s largest export earner, contributing significantly to regional economies through employee pay, capital investment, and purchases from other businesses.

Business Preparations for Market Opportunities

Investment, mergers, and changes in corporate strategy are taking place in New Zealand as businesses prepare for future market opportunities. New Zealand's dairy industry plays a significant role in the country's economy. Dairy’s share of New Zealand’s goods export earnings is more than a third. The sector contributed $10.7 billion directly to GDP, supported 51,800 jobs, and paid wages totaling $4 billion. Dairy export revenue reached $28.3 billion in 2025, compared with $13.4 billion in 2015.

Fonterra Co-operative Group

New Zealand’s largest agricultural enterprise, Fonterra Co-operative Group, is based here. Fonterra is involved in dairy processing and has been undergoing structural changes under the leadership of CFO Andrew Murray. Fonterra farmers in New Zealand have contracted more than 125 million kilograms of milksolids through fixed milk price programmes this season. The total has exceeded the cooperative’s previous annual records, with two monthly tender rounds still to come.

Energy Security Concerns

New Zealand's dairy export earnings could be jeopardised by unreliable electricity and gas supplies. Dairy exports earned approximately $25 billion in the 2026 financial year, with about $19.6 billion returning to the domestic economy. Fonterra is concerned about the energy security needed to sustain dairy production and the wider rural economy.

Fonterra Operations

Fonterra operates 28 processing sites in New Zealand. Preparing the businesses for possible ownership changes required checks on asset values, depreciation schedules, inventories, and opening balance sheets for standalone manufacturing subsidiaries.

Global Dairy Trade Auction

The Global Dairy Trade auction, known for providing market-price information for dairy products, took place in New Zealand, highlighting the country's involvement in the international dairy commodity markets. The dairy season began with solid volumes, supported by favourable grazing conditions. Milk output is expanding in New Zealand. Weather remains a source of uncertainty in Oceania, where deteriorating conditions could reduce yields; the possible effects of El Niño are also being monitored. New Zealand recorded a 2.4% rise in milk flows and a 3.4% increase in milk solids, with growth potentially reaching 4% or more.

BVD Prevalence in New Zealand's Dairy Herd

Bovine viral diarrhoea (BVD) prevalence in New Zealand’s national dairy herd has fallen below 5%. New Zealand’s dairy industry eliminated enzootic bovine leucosis in 2009 after a campaign lasting 12 years. New Zealand has opened a trade and investment dialogue with Brazil as it considers formal free-trade negotiations for 2027. New Zealand is exploring a bilateral agreement with Brazil or a wider pact with the Mercosur bloc, focusing on sectors like dairy and agricultural technology. New Zealand's dairy industry is pressing the government to begin World Trade Organization dispute proceedings against Canada. The industry estimates that depressed prices reduce New Zealand exporters' returns by about $256 million a year. The government officials are completing technical assessments of the country's prospects at the WTO and are working with other agricultural-exporting countries that could participate in proceedings as co-litigants.

Weather and Environmental Concerns

New Zealand dairy farmers face rising drought risk due to El Niño. Rainfall shortages and drying spring winds are reducing soil moisture in Northland as dairy herds approach their seasonal peak in milk production. Farmers are urged to prepare for a potentially prolonged dry summer by adjusting grazing, supplementary feeding, and herd management. New Zealand dairy farms cut light pollution through shed-lighting upgrades. Dairy farmers in Kaikōura have worked with the Kaikōura Dark Sky Trust to reduce light pollution while maintaining safe conditions for night-time work. Kaikōura received international recognition as a dark sky sanctuary in September 2024.

Target Market for Product Availability

The factory will broaden product availability in New Zealand. Massey University and its contributions to the dairy industry. Massey University is involved in various dairy-sector innovations and collaborates with organizations such as the Dairy Research Institute and Fonterra. It supports the industry's value chain, considering New Zealand’s exports to international markets.

Comparison of Milk Solid Content and Production Costs

The combined fat and protein content of milk from Rio Grande do Sul ranges from 6% to 7.5%, compared to an average of 9.17% in New Zealand. The production cost in Rio Grande do Sul is US$5.82 per kilogram, versus US$3.33 in New Zealand.

Artisan Dairy Processors

Artisan dairy processors in New Zealand face challenges due to transport disruptions. Artisan dairy processors in New Zealand say road closures, rising local property rates and higher operating costs are putting pressure on small businesses.

Notification Issued by Food Standards Australia New Zealand

The recall of Arla Protein Salted Caramel Flavour Pudding in Singapore followed a notification from this agency.

Location of Synlait Milk, a Dairy-Nutrition Processor

Synlait Milk is working through a financial recovery and strategic reset in New Zealand.

Lactalis's Expanding Operations

Lactalis expanded its regional presence through the acquisition of Fonterra's global consumer and associated businesses.

New Zealand Dairy Processors

New Zealand dairy processors are seeking alternative buyers due to US tariffs. New Zealand dairy processors are reviewing regional revenues and seeking alternative buyers as a US tariff puts pressure on margins. Some businesses derive between 20% and 85% of revenue from the United States.

New Zealand Dairy and Agricultural Exporters

New Zealand dairy and agricultural exporters face increased disadvantages due to US tariffs. New Zealand's exports of goods and services reached $32.5bn in the June 2026 quarter. The United States has become New Zealand’s second-largest overall export destination, with bilateral trade worth $9.0bn and accounting for 12% of the country’s total exports.

Fonterra, a New Zealand Dairy Cooperative, Invests in Vivici

Fonterra’s investment and technical cooperation give the dairy cooperative an equity position in Vivici’s non-bovine protein fermentation activities while it continues its established dairy operations in Australasia.

New Zealand Dairy Operators

New Zealand dairy operators are reporting stronger confidence as milk payouts firm and public attitudes towards pastoral farming improve. Confidence has recovered in several of New Zealand’s main dairy regions, including the Waikato area. Dairy businesses are rebuilding commercial momentum, although operators have also pointed to pressure on household budgets, higher urban living costs and gaps in rural services. Waikato dairy owner-operators increased milk production. The rural accountancy firm’s survey covered 134 dairy businesses in New Zealand’s Waikato region, spanning owner-operated farms, 50:50 sharemilking arrangements, variable-order sharemilking and contract milking. Supportive weather and pasture conditions on both the North and South Islands.

Favourable weather and better pasture conditions on both the North and South Islands supported the increase in milk intake. Farms recorded productivity improvements, with grass growth remaining steady during the spring production peak.