New Zealand Dairy Exports Set to Bounce Back Amid Global Challenges

MPI Director General Ray Smith has expressed optimism as the Ministry for Primary Industries released its latest outlook report on the primary sector. The report reveals a projected recovery in dairy export returns, reaching $25.5 billion in 2025.

This resurgence is primarily attributed to anticipated increases in whole milk powder (WMP) exports, expected to bring in $8.4 billion—more than a billion increase from the previous year. Similarly, butter, AMF, and cream exports are predicted to reach a staggering $5 billion in 2025, a substantial rise compared to last year’s figures.

Despite the dairy sector's success, the infant formula market struggles, with export returns declining and expected to dip further. Nevertheless, the report notes that global dairy prices are expected to rise in the 2024/25 seasons. This is due to robust global demand coupled with tight supply, alongside favorable weather conditions in New Zealand expected to bolster export volumes.

China stands out as the largest market for New Zealand’s dairy products, except for casein and protein products. Overall, China imports nearly $17 billion worth of New Zealand's primary products.

Ray Smith attributes the industry's success to its strong fundamentals, emphasizing the high demand for dairy ingredients and the competitive advantage New Zealand holds in producing high-quality products at relatively affordable prices.

While favorable weather is expected to enhance milk production on farms, Smith points out this won’t pose a problem as global volumes are down. The US dairy herd has reduced due to climate-related issues, and heat stress in various countries is diminishing milk output.

Addressing climate change, Smith highlights New Zealand’s advantageous position compared to other global dairy suppliers due to its geographical location, reducing the potential impact of climate change on its dairy production.