New Zealand's Dairy Industry in 2023

New Zealand stands as a powerhouse in the global dairy industry, producing an impressive 21.4 billion liters of milk annually. The sector is a cornerstone of the nation's economy, with dairy exports reaching 4.6 million metric tons valued at NZ$18.2 billion. These exports are primarily directed towards Asian and Middle Eastern markets.

Key Enterprises and Market Dynamics

The industry is dominated by major companies such as Fonterra, Synlait Milk, Westland Milk Products, Yili, Bright Dairy, and Pure Nutrition. A significant development in the industry includes Westland Milk Products' acquisition of a 60% stake in Pure Nutrition for NZ$31.1 million. Fonterra's investment of NZ$150 million in a new UHT cream plant in Southeast Asia highlights the sector's expansion efforts.

Challenges and Opportunities

The dairy sector 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 expected 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 the implementation of wearable technology. Projects like the EcoPond system and native tree planting aim to reduce emissions and enhance biodiversity.

Labor and Employment

The sector employs approximately 41,000 individuals, relying heavily on international workers. A DairyNZ survey indicates that over 80% of dairy farm employees intend to remain in the industry, underscoring the sector's importance in employment.

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. 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, 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 over the next decade. Fonterra advocates for dairy inclusion in New Zealand FTAs, warning against the exclusion of dairy in 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, involved in tasks such as calving cows and training new team members.

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’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. New Zealand dairy producers face pressure due to Fonterra's lowered milk-price forecast, affecting cash receipts across main milk-producing areas.

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.

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.

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 customized grocery baskets, helping households compare supermarket prices and plan online grocery purchases.

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, allowing courts to impose substantially higher penalties for environmental offending.

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. The country is involved in the Kaipara Moana Remediation and Fonterra project, supporting 149 Northland and Auckland farms in New Zealand.

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.

Halter's Technological Advancements

Halter is replacing virtual-fencing collars in New Zealand, 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 market rise. Farmgate milk payments affected the timing of farmers’ purchases and coincided with wider use of the company’s Thriver calf-feeding teats.

Demand for Dairy Farms

Demand for dairy farms in New Zealand’s Waikato region has increased. The rural property market is recovering, with agents reporting more enquiries and faster movement of listings.

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.

Global Trade Dynamics

Bega purchased Mondelez’s New Zealand grocery business as part of a larger transaction. New Zealand could benefit from the US-Canada dairy trade dispute.

Economic Impact and Workforce

New Zealand’s dairy sector remains the country’s largest goods-export earner, directly supporting 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.

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 is one of Fonterra’s largest dairy-processing sites in New Zealand.

Financial Performance

New Zealand’s state-owned farming enterprise Pāmu reported a 131% rise in net operating profit for the 2026 financial year. Pāmu saw its net operating profit reach a record level in FY26, with substantial gains across its dairy and livestock businesses.

Global Competitiveness

New Zealand is identified as a significant competitor in global dairy trade, especially in powdered milk.

Farm Management Innovations

A New Zealand dairy farmer revised four parts of the spring-calving routine, reflecting the demanding periods in the pastoral dairy year.

Production Expansion in New Zealand

The August Global Dairy Update reported increased milk output in New Zealand during May, June, and July, supporting milk-powder prices.

New Zealand Dairy, Meat, and Wine Exporters

New Zealand dairy, meat, and wine exporters could collectively recover as much as NZ$1 billion after the US Supreme Court invalidated emergency tariffs.

Agile and Technologically Advanced Food Industries

New Zealand's food industries are agile and technologically advanced, responding to consumer purchasing changes and advancing sustainability efforts.

Innovative Solutions for Consumers

Beef sires now account for 12% of dairy inseminations in New Zealand. Farmers are incorporating beef breeding more deliberately into seasonal mating programs.

El Niño Risks

El Niño risks are threatening dairy margins, with meteorological models indicating a stronger El Niño pattern could create operational risks.

Danone's Product Launch

Danone has launched its YoPro high-protein yoghurt range in New Zealand, made at their facility in Victoria's Kiewa Valley, Australia.

New Zealand Dairy-Technology Company Herd-i

Herd-i was established in 2021, focusing on monitoring dairy-herd health and performance, serving producers in New Zealand.

Rabobank’s Senior Analyst for New Zealand, Emma Higgins

Emma Higgins from Rabobank states that milk production growth is weakening in New Zealand. ProviCo's international sales include New Zealand as a destination for its specialized dairy protein ingredients.

Commercial Dairy Property Values

Commercial dairy property values across New Zealand's South Island have risen to record levels, with a recent sale reaching almost $89,000 per hectare.

Oceania's Weather Impact

Oceania, led by New Zealand, remains exposed to weather cycles. Those conditions limit the accumulation of unusually large export surpluses. Goodman Fielder expands UHT production in Christchurch.

Climate Case Involvement

New Zealand is involved in a major climate case involving Fonterra and other corporate emitters. The case examines legal responsibilities of New Zealand's largest business, Fonterra, concerning greenhouse-gas emissions and climate change impacts.

Milk Price Projections

Rabobank expects New Zealand milk prices to approach $10/kgMS. Rabobank says New Zealand’s farmgate milk price could end the 2026/27 season near $10 per kilogram of milk solids. Fonterra’s decision to reduce its opening forecast to $9.25/kgMS was mentioned, with Rabobank predicting a potential price increase.

Self-Service Retailing

A dairy business near Sefton, New Zealand, has combined self-service retailing with cooperative processing. Selling raw milk requires compliance with rules administered by New Zealand’s Ministry for Primary Industries. The requirements include biosecurity controls, hygiene procedures and regular microbiological testing.

Record Milk Supply

New Zealand's milk supply is expanding, reaching record production levels. Output reached a record 2.027 billion kg MS in the previous season, the first time national production exceeded 2bn kg MS. Monthly production in June and July 2026 was above the corresponding figures from a year earlier and set records for both months.

El Niño Conditions

El Niño conditions are developing, expected to affect New Zealand weather into autumn 2027. El Niño conditions are developing in the tropical Pacific. The event is expected to strengthen through spring, reach its peak in early summer, and affect New Zealand weather into autumn 2027. It is expected that northern and eastern New Zealand will experience drier-than-usual conditions during spring and summer.

DairyNZ Pasture Trials

DairyNZ expands pasture trials across New Zealand’s upper North Island. The programme covers dairy, sheep and beef operations in Waikato, Bay of Plenty and Northland.

Olam Food Ingredients' Pilot Farms

Olam Food Ingredients is testing almond hulls and shells from Australia as feed for dairy cows on pilot farms near Tokoroa, New Zealand. Initial results are being assessed for methane reduction, milk production and farm input costs. Ofi does not expect every New Zealand farmer to adopt almond hulls. Sabri said farms differed in their feed systems, economics and willingness to change, and that the scale of any future use would depend on farmer uptake.

Free-Trade Agreement with India

New Zealand lawmakers have passed legislation to implement the country’s free-trade agreement with India. The agreement is designed to remove or reduce duties on about 95% of New Zealand’s exports to India, while Indian goods will receive duty-free entry into New Zealand. New Zealand has pledged to invest NZ$20 billion in India over the next 15 years. The two governments have also linked the agreement to increased investment and wider economic co-operation.

Innovative Farming Techniques

Bruce Dinnington runs a 350-cow dairy farm near Invercargill that combines robotic milking with seasonal grazing. His farm in Dacre, near Invercargill on New Zealand’s South Island, combines a freestall wintering barn, automated equipment, and pasture-based dairying. The farm is not operated under a certified organic label, but its design is intended to preserve pasture conditions and support animal welfare.

Location of Miriam Lauridsen's Dairy Farm

Miriam Lauridsen manages a 137-hectare System 3 dairy farm south of New Plymouth in Taranaki, New Zealand.

Commercial Trials for Synthetic Feed Additives

The funding was allocated to commercial trials in Australia, New Zealand, Brazil, and the United States, as well as product development and pilot manufacturing.