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New Zealand's Dairy Industry in 2023

New Zealand stands at the forefront of the global dairy industry, renowned for its high-quality dairy exports and robust production capabilities. The industry is adeptly navigating economic challenges and environmental concerns while enhancing its global market stature.

Production and Processing Metrics

New Zealand hosts approximately 5.1 million dairy cattle, contributing significantly to the country's annual milk production of around 21.4 billion liters. The nation's processing infrastructure efficiently handles nearly 20 billion liters of milk annually, maintaining top-tier global quality standards. Cheese production is projected to reach 375,000 tons by 2024, while milk powder remains a cornerstone with an estimated output of 1.5 million tons each year.

Key Enterprises in the Dairy Market

Dairy Plants

• Fonterra
• Synlait Milk
• Westland Milk Products
• Yili
• Bright Dairy
• Pure Nutrition

Dairy Farms

• Organic Dairy Hub (ODH)
• Various privately-owned farms
• Fonterra-affiliated farms

Exports and Imports

In 2023, New Zealand's dairy exports reached approximately NZ$18.2 billion, underscoring the nation’s role as a leading global dairy exporter. The domestic market sees negligible dairy imports, reinforcing New Zealand's self-sufficiency in dairy production.

Significant Industry Events

Economic Factors

Inflation has increased operational costs for dairy farmers, and Synlait Milk is experiencing financial difficulties due to limited backing from Bright Dairy. Rising local demand for anhydrous milk fat and butter is influencing market dynamics and pricing.

Acquisitions and Investments

Westland Milk Products acquired a 60% stake in Pure Nutrition for NZ$31.1 million, while Fonterra's $150 million investment in a new UHT cream plant in Southland is underway. The introduction of New Zealand's first green hydrogen dual-fuel milk collection tanker by Miraka marks a significant step towards sustainability.

Market Dynamics and Outlook

Record-high farmgate prices were reported by Fonterra due to favorable conditions, allowing an updated milk payout forecast. Milk collections rose by 5.2% thanks to favorable weather conditions affecting supply. The historic forecast for the milk price stands at NZ$10 per kilogram of milk solids. The New Zealand dairy sector is advancing towards sustainability, marked by Fonterra's $64 million allocation for emission reductions. Partnerships, such as those with the UAE, are crucial in fortifying New Zealand's international market presence amidst climate challenges and global trade complexities.

Recent Developments

The dairy sector in New Zealand witnessed substantial production increases, with January 2023 figures surpassing projections. Moreover, Pāmu, the state-owned enterprise, announced a notable half-year net profit of $62 million. Noteworthy is Fonterra’s NZD 10/kgMS mid-point milk price forecast, amidst dropping interest rates. Public discussions have intensified about environmental concerns, with Greenpeace Aotearoa's allegations against Fonterra regarding palm kernel use impacting relations with companies like Nestlé.

Fonterra, a New Zealand cooperative, is planning an IPO for its consumer business Mainland Group. Additionally, Fonterra is exploring an IPO to reduce its involvement in retail sales, highlighting strategic shifts in their business model. New Zealand supports free trade, recognizing the importance of frameworks like the World Trade Organization for small trading countries. Unexpected gains in NZ butter offset another decline in anhydrous milk fat (AMF) prices. Fonterra, New Zealand's largest dairy cooperative, reported an increase in its first-half net profit by 8%, reaching $729 million. There's growing interest in goat's milk due to its potential digestive benefits compared to cow's milk, suggesting market diversification opportunities. The government's "Science for Farmers" initiative is aimed at boosting sustainability and productivity within the agriculture sector. Synlait, a dairy company based in New Zealand, reported a return to profitability in their half-year results, with an impressive earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $63.1 million.

Fonterra hailed the record-high milk prices for New Zealand farmers.

Modified: 2025/03/24