New Zealand's Dairy Industry in 2023

The dairy industry in New Zealand is a pivotal component of the national economy, supported by a substantial dairy herd of approximately 5.1 million cattle. This robust livestock base facilitates an impressive annual milk production of 21.4 billion liters, with processing capabilities reaching up to 20 billion liters annually.

Processing and Export

New Zealand is a leading producer of milk powder and whey, with an annual output of 1.5 million tons. The cheese production sector is expanding, with expectations to reach 375,000 tons by 2024. In 2023, the country’s dairy exports totaled 4.6 million metric tons, valued at approximately NZ$18.2 billion, with 95% of these products being exported primarily to Asian and Middle Eastern markets. The nation accounts for 35% of global milk powder exports, underscoring its significant role in international trade.

Key Enterprises and Market Dynamics

Major companies such as Fonterra, Synlait Milk, Westland Milk Products, Yili, Bright Dairy, and Pure Nutrition play pivotal roles in the industry. Notable investments include the acquisition of a 60% stake in Pure Nutrition by Westland Milk Products for NZ$31.1 million and Fonterra’s NZ$150 million investment in a new UHT cream plant.

Economic Impact and Farmgate Prices

The dairy sector is integral to New Zealand’s economy, with milk prices expected to generate around NZ$15 billion for the current season. The Farmgate Milk Price remains stable at NZ$10.00 per kgMS, reflecting the sector’s strong economic foundations.

Challenges and Opportunities

The industry faces challenges such as inflation-driven cost increases, downturns in the butter business, and potential labor shortages due to visa expirations. The government is addressing these issues by investing over NZ$400 million in methane mitigation, aiming for 11 commercially available options by 2030.

Environmental and Technological Innovations

New Zealand aims to double its dairy export value by 2034, focusing on diversification and sustainability. Nestlé is financing the country’s first commercially viable Net Zero dairy farm. Wearable technology is extensively used to manage around a million cows, generating approximately 20 million data points daily.

Labor and Employment

The dairy sector contributes over 7% of New Zealand’s GDP, employing around 41,000 people. Due to labor shortages, there is a notable reliance on international workers to sustain operations.

Strategic Developments and Investments

Fonterra plans to invest up to NZ$1 billion to enhance efficiency, including a NZ$75 million expansion in butter production. Negotiations for a free trade agreement with India are underway, aiming to improve market access and facilitate skilled professional movement.

Animal Wellbeing and Sustainability

Emphasizing animal wellbeing, the industry utilizes wearable technology to improve cow metrics. Research at DairyNZ’s Scott Farm in Hamilton explores the effects of a 24-month calving interval on labor peaks and profitability.

Waiū Dairy and Māori-owned Dairy Processors

Waiū Dairy faces financial challenges, reflecting broader difficulties for independent Māori-owned processors competing against larger corporations.

Fonterra's Environmental and Production Efforts

Fonterra’s Eltham site in Taranaki is undergoing upgrades to expand cheese production capacity to meet international demand.

Legislative Changes

The government has repealed the longstanding Resource Management Act (RMA), introducing three new legislative measures: the Natural and Built Environment Act (NBA), the Spatial Planning Act (SPA), and the Climate Change Adaptation Act (CCAA).

Technological Advancements

Radix Nutrition has launched an AI-driven platform, transforming product formulation and enabling upgraded products such as freeze-dried breakfast cereals, protein powders, and smoothies.

Future Outlook

New Zealand’s food and fibre exports are projected to reach a record $62 billion in 2026, with dairy contributing a 1% increase. Despite the threat of precision-fermented milk, Fonterra focuses on ingredient market segments, enhancing organic milk production in the South Island.

Operational Challenges

Dairy farms in New Zealand face disruptions due to fuel shortages, impacting daily operations and logistics.

Industry Acquisitions

Lactalis and Abbott have completed significant acquisitions in New Zealand, enhancing their capability to meet increasing global dairy product demand.

Focus on Sustainable Dairy Practices

Initiatives such as the EcoPond system and native tree planting aim to reduce emissions and improve biodiversity.

Commitment to the Industry

A DairyNZ survey reveals that over 80% of dairy farm employees plan to remain in the industry, showcasing strong commitment.

New Zealand's Global Dairy Trade

New Zealand recorded dairy exports to India totaling USD 1.07 million in the fiscal year 2025. The Free Trade Agreement with India provides duty-free access for 100% of its exports to India. The a2 Milk Company, based in New Zealand, is known for its protein-enhanced milk marketed as easier to digest. The entry of cheaper American butter into New Zealand is causing confusion among consumers and pressuring local dairy pricing.

International Representation

Hinehou Timutimu represented New Zealand at the APEC Technical Cooperation Workshop in Bangkok in 2025, contributing to discussions on women’s economic empowerment and sustainable agriculture.

New Initiatives

A new initiative has been launched to boost the dairy-beef sector, involving DairyNZ, the New Zealand Government, and other industry leaders to foster sector-wide collaboration.

Yili's New Zealand Operations

Yili’s New Zealand operations reported a record revenue of $1.58 billion in 2025, a 14% increase from 2024, focusing on sustainable partnerships with local dairy farmers and stakeholders.

Cheese Import Growth

New Zealand leads in the growth of cheese imports to China, reflecting the shift towards higher value-added products.

Milk Production Growth

Favorable weather conditions contributed to a 6% growth in milk production in New Zealand. Record milk flows are contributing to aggressive WMP exports, with 2025/26 milk production tracking above prior seasons.

Competitive Dynamics

Fonterra faces increasing competition in New Zealand, with plans for future investments concentrated in New Zealand, including upgrades to dairy processing facilities and projects in advanced protein and UHT cream production. Yili Group’s restructuring in New Zealand raises job cut concerns as part of efforts to improve efficiency and competitiveness.

Price Stability

New Zealand maintained price stability in milk prices, with a slight 0.8% decrease, supporting its efficient export model.

Southeast Asia Focus

New Zealand’s Fonterra is focusing on Southeast Asia as a major growth market for its foodservice division. Fonterra, the New Zealand-based dairy cooperative, is intensifying its efforts in the Southeast Asian market, aiming to capitalize on the growing dairy demand in the region.

Legislative Advancements

New Zealand has reformed its climate legislation to limit legal challenges related to emissions targets, prompting reactions from the dairy and agricultural sectors. New Zealand’s government has announced amendments to its climate laws, focusing on limiting lawsuits related to emissions reduction targets and climate policy decisions. This legislative shift is seen as a significant move affecting the country’s agriculture and dairy sectors, which are integral to its greenhouse gas profile.

International Supply

New Zealand is a major supplier of concentrated raw materials to Saudi Arabia, providing 58% of imported whole milk powder and 40.5% of imported butter to the country.

Sector Performance

New Zealand's dairy sector is experiencing a boom, with record milksolids production and high dairy prices. The strong performance is attributed to favorable weather conditions and robust milk prices, providing an advantageous environment for dairy farmers. This season has reaffirmed New Zealand’s position as a leading global dairy exporter.

Modified: 2026/05/20