New Zealand's Dairy Industry in 2023

New Zealand continues to assert itself as a global powerhouse in the dairy industry, producing an impressive 21.4 billion liters of milk annually. This sector is a cornerstone of the nation's economy, significantly bolstered by exports reaching 4.6 million metric tons valued at NZ$18.2 billion. A substantial 95% of these exports are destined for Asian and Middle Eastern markets, underscoring the strategic importance of these regions.

Key Enterprises and Market Dynamics

The New Zealand dairy sector is dominated by major companies such as Fonterra, Synlait Milk, Westland Milk Products, Yili, Bright Dairy, and Pure Nutrition. A notable development includes Westland Milk Products' acquisition of a 60% stake in Pure Nutrition for NZ$31.1 million. Fonterra has invested NZ$150 million in a new UHT cream plant in Southeast Asia.

Challenges and Opportunities

The industry faces challenges such as inflationary pressures, a declining butter market, and potential labor shortages. Environmental concerns are being addressed with a government allocation of over NZ$400 million towards methane reduction, with solutions anticipated by 2030. The sector aims to double its export value by 2034 through diversification and sustainable practices.

Environmental and Technological Innovations

Technological advancements and environmental initiatives are pivotal for future growth. Innovations include Nestlé's support for a Net Zero dairy farm and wearable technology generating extensive data. Projects such as the EcoPond system and native tree planting are designed to reduce emissions and enhance biodiversity.

Labor and Employment

The dairy sector employs approximately 41,000 individuals, heavily relying on international workers. A DairyNZ survey indicates over 80% of dairy farm employees intend to remain in the industry, highlighting its stability and appeal.

Strategic Developments and Investments

Fonterra plans to invest up to NZ$1 billion in operational efficiency, including a NZ$75 million expansion in butter production. New Zealand is negotiating a free trade agreement with India to enhance market access. Collaborations, such as the one between Fonterra and Silver Fern Farms, aim to integrate dairy and beef production.

International Trade

New Zealand is a dominant force in global dairy trade, supplying 58% of Saudi Arabia's whole milk powder imports and 40.5% of its butter imports. The country benefits from Thailand's zero-tariff policy on dairy products. Despite some market share loss to Uruguay in Algeria, New Zealand remains a key player, contributing 22% to the global dairy market and exporting over 106,000 tonnes of cream to China.

Environmental Solutions and Trials

A five-year trial in Northland demonstrates that low-input dairy systems can reduce greenhouse gas emissions. Similarly, a trial at Lincoln University found that incorporating plantain into pastures can reduce nitrate leaching by 33% without affecting milk production or profitability.

Future Projections

Dairy export earnings are expected to reach NZ$31 billion by 2030, up from NZ$28.6 billion in the year ending June. Dairy products constitute nearly a third of New Zealand's total exports, with the country maintaining a dominant position in full cream milk powder exports, projected to account for 53% of global exports by 2025.

Innovative Product Development

The Moxham family, leading organic milk producers, have introduced a gelato line to utilize unsold milk, reducing waste and adding value.

Regulatory and Financial Landscape

The Ministry for Primary Industries is reviewing the Dairy Industry Restructuring Act, focusing on pricing and supply regulations. Fonterra and independent processors benefit from a reliable payout floor, essential for risk management. ANZ, the largest rural lender, is enhancing financial resilience for regional farms amid market fluctuations.

Increased Milk Production

Cheddar cheese prices have fallen by 6.5% over the last year due to strong milk production, which has increased by about 4% in New Zealand. Despite the global supply increase, recent Global Dairy Trade auctions have shown a decline in prices, with one auction recording a 4.9% drop, the largest of the year.

Special Initiatives

Proliant Health and Biologicals has launched a colostrum processing program in Feilding, aligning with a shift towards high-value products. Seasonal low production periods reduce milk availability ahead of the new production season.

Global Position

New Zealand is the world's largest single-country dairy exporter, with export volumes stabilizing at 22 billion kg annually since 2023. It accounts for more than a fifth of all dairy products traded internationally. Recent U.S. tariffs have created unease among New Zealand exporters, who are wary of potential additional tariffs from a separate investigation into lamb imports.

Trade Negotiations

The dairy sector challenges Swiss trade deal terms, emphasizing the importance of comprehensive agreements as dairy is New Zealand’s largest single goods export. New Zealand continues to dominate international dairy trade, expected to be a major contributor to global dairy trade over the next decade. Fonterra advocates for dairy inclusion in New Zealand FTAs and has urged New Zealand to prioritize dairy in future Free Trade Agreements (FTAs), warning against the exclusion of dairy in potential trade deals with developed countries.

Farm Worker Appreciation

New Zealand marks Farm Worker Appreciation Day, recognizing the vital role of 51,800 dairy sector workers. These individuals are essential to the success of farm businesses, being involved in various tasks such as calving cows, training new team members, and ensuring farms remain productive and sustainable. Over 53,000 workers in the sector are recognized for their crucial roles, especially during the busy calving season. The initiative aims to encourage farm businesses to appreciate their employees' efforts, which support local food production and international dairy supply. Adjustments in work organization, such as changing rosters and fostering long-term career opportunities, are being implemented as part of broader workforce strategies, leading to improved employee retention rates across the sector.

Generational Transition

New Zealand’s primary sector is entering a generational transition as the median farmer age reaches 49.8 years. Rabobank estimates that more than half of the country’s 17,320 farm and orchard owners will turn 65 over the next decade, involving an intergenerational wealth transfer of about $150 billion. New Zealand plans to raise fuel excise from early 2027. The proposed fuel-excise changes are set to begin in early 2027, with an initial rise of 12 cents per litre, followed by annual increases. This could impact rural freight operators and primary producers, affecting transport costs for milk collection, fertiliser distribution, and stock cartage.

New Zealand’s Cattle-Genetics Trade in Europe

New Zealand's cattle-genetics trade was built in Europe by Everett Thorburn, utilizing scientific breeding data and commercial trading to promote pasture-based cattle genetics beyond New Zealand. New Zealand dairy producers face pressure due to Fonterra's lowered milk-price forecast. The lower forecast affects cash receipts across New Zealand's main milk-producing areas. Producers are encouraged to update budgets and manage expenditures.

Dairy Conversions in Canterbury

Dairy conversions in Canterbury are creating a shortage of cattle in New Zealand’s South Island. Regional consents could add at least 25,000 cows to the milk pool over coming seasons, while strong demand has raised procurement and transport costs. Land-use changes in Canterbury are expanding the region’s dairy capacity as returns from arable farming remain weak and milk payouts stay strong.

Livestock Market

New Zealand’s livestock market is entering the spring yearling bull sale season with strong demand and high price expectations. Firm beef export returns, dairy valuations, and growing dairy-beef integration are supporting interest from both dairy farmers and commercial beef producers. Within New Zealand, strong schedules for finished cattle have encouraged beef farmers to rebuild their herds, even as farm businesses face higher input costs and wider economic pressures.

Dairy Export Growth

New Zealand’s dairy exports rose 16.5% year on year in June. Shipments of skim milk powder, cheese, butter, and infant formula supported the increase, offsetting weaker demand from mainland China for whole milk powder.

Innovative Solutions for Consumers

Otago dairy farmer Will Duff has launched CheckMyTrolley, a free app that lets New Zealand shoppers compare the cost of customised grocery baskets. The app is designed to help New Zealand households compare supermarket prices and plan online grocery purchases. Research by Consumer NZ cited in the report found that food costs had overtaken rent and utility bills as the leading financial concern for households.

Feeder Calf Market

The feeder calf market in New Zealand showed strong competition at the start of the season, with high prices in July and a slight decrease in August. The market is supported by commercial rearers and changing calving patterns towards dairy-beef crossbreds.

Resource Management Act Changes

Changes to New Zealand’s Resource Management Act have lifted the maximum fine for companies. New Zealand’s Resource Management Act (RMA) now allows courts to impose substantially higher penalties for environmental offending. The changes were enacted through the Resource Management (Consenting and Other System Changes) Amendment Act, which raised the corporate maximum from $600,000 to $10m and the individual maximum from $300,000 to $1m.

Family Business Expansion

Good Guise, a family business in Mossburn, Southland, New Zealand, expanded its paneer production beyond local customers to supply Costco in Auckland and Pizza Hut.

Location of the Mataura Valley Milk Processing Plant

The A2 Milk Company divested its majority stake in the Mataura Valley Milk processing plant near Gore in New Zealand. The country is involved in the Kaipara Moana Remediation and Fonterra project, supporting 149 Northland and Auckland farms in New Zealand, focusing on environmental stewardship and dairy farming improvements.

Global Dairy Trade Reference Point

The New Zealand-based marketplace is used as a reference point in international dairy commodity trading. GlobalDairyTrade’s auction outcomes are used by producers, exporters, and processors when assessing prices for dairy products. New Zealand is one of the countries providing genetic material for the Jersey herd.

Halter's Technological Advancements

Halter is replacing virtual-fencing collars in New Zealand. Halter, a New Zealand agritech company, is addressing battery and hardware failures of virtual-fencing collars on dairy farms nationwide.

High Court Clears GDX Liquidators to Recover Millions

The High Court in Hamilton has ruled that payments made to 96 farmers for cattle supplied to GDX can be reclaimed as voidable transactions. Liquidators will seek about $9m, plus statutory interest, from suppliers who were paid before Genetic Development (NZ) Exports entered liquidation.

Skellerup Holdings

Skellerup Holdings, a New Zealand-based manufacturer of industrial and agricultural polymer products, saw revenue in the domestic New Zealand market rise. Farmgate milk payments affected the timing of farmers’ purchases and coincided with wider use of the company’s Thriver calf-feeding teats. New Zealand's raw-milk pricing is linked to Global Dairy Trade export parity.

Demand for Dairy Farms

Demand for dairy farms in New Zealand’s Waikato region has increased. New Zealand’s rural property market is recovering in its main dairy-producing region, with Waikato agents reporting more enquiries and faster movement of listings. New Zealand dairy farmers are expanding their use of covered barns, enclosed housing, and composting facilities. New Zealand dairy farms are using off-paddock facilities more often as farmers seek to manage the effects of wet conditions on land and livestock. The investments include enclosed animal housing, covered barns, composting barns, and systems for storing effluent.

Crystal Rivers Dairy Farm

Crystal Rivers dairy farm is located in Taranaki, New Zealand. The farm is a 196-hectare dairy property, including 150 hectares of effective milking area, near Te Papakura o Taranaki, also known as Egmont National Park. The area receives heavy rainfall, creating difficult conditions for maintaining pasture and managing livestock.

Global Trade Dynamics

Bega purchased Mondelez’s New Zealand grocery business. In 2017, Bega acquired Mondelez’s New Zealand grocery business as part of a larger transaction. New Zealand could benefit from the US-Canada dairy trade dispute. An analysis cited by NZ Herald said the changes could create openings for New Zealand suppliers of cheese, butterfat, and dairy ingredients. New Zealand exporters could seek additional sales if buyers and cross-border supply chains turn to alternative producers.

Economic Impact and Workforce

New Zealand’s dairy sector remains the country’s largest goods-export earner and directly supports more than 51,000 jobs. Dairy exports reached $28.8bn in the year to December 2025, making the sector New Zealand’s largest goods-export category by a substantial margin. The sector directly provides more than 51,000 jobs nationwide and significantly impacts regional GDPs.

Product Spotlight

Among the named products in the list was Anchor Butter from New Zealand. The a2 Milk Company disclosed similar transactions to the New Zealand Exchange. Fonterra's Clandeboye manufacturing facility, located in the Timaru District, is one of Fonterra’s largest dairy-processing sites in New Zealand. New Zealand has increased protein at a faster rate than butterfat. New Zealand's protein-to-fat ratio started and ended the 2015-25 period at 0.77. The country, along with the EU and the U.S., makes up about two-thirds of global dairy exports and has increased protein at a faster rate than butterfat. New Zealand is a major international producer of dairy products. Sebastián Alconada referred to New Zealand and Australia as major international producers whose output could affect global market conditions.

Financial Performance

New Zealand’s state-owned farming enterprise Pāmu reported a 131% rise in net operating profit for the 2026 financial year. Pāmu, formally Landcorp Farming Ltd, saw its net operating profit reach a record level in FY26, with substantial gains across its dairy and livestock businesses. The company also reported a 33% increase in after-tax profit and will pay $40m in dividends to the Crown.

Global Competitiveness

New Zealand is a particular focus of the sector’s concerns. A statement from the University Council of the University of Costa Rica identified New Zealand as a significant competitor because of its role in global dairy trade, especially in powdered milk.

Farm Management Innovations

A New Zealand dairy farmer revised four parts of the spring-calving routine. New Zealand dairy farming involves demanding periods in the pastoral dairy year, with heavy physical and mental demands on farmers. The changes implemented by a New Zealand operator included redesigning farm infrastructure, improving colostrum handling, reorganizing labor, and addressing mental health, which were part of a management approach aimed at improving herd welfare.

Modified: 2026/09/02