New Zealand look to change export focus

Published 3 July 18

With a limited home market of only 4.7 million people, roughly the same as the Republic of Ireland, about 95% of New Zealand’s (NZ) dairy production goes to export markets. Rising exports have supported the growth of the industry, although recently production has stalled at around 21bn litres/year, limiting growth of export volumes.

Further growth in NZ milk production will be constrained by the availability of land and environmental pressures around water quality and nutrient management. According to its Trade Envoy Mike Petersen, the limitations on production growth means the NZ industry needs to shift its focus towards increasing the value of exports, rather than pushing for higher volumes.

NZ Production Trends

Currently, NZ’s exports are dominated by commodity products such as whole milk powder (WMP), skim milk powder (SMP) and butter, which have historically accounted for 80-85% of all dairy export volumes.

In the last five years, the contribution of milk powders to the value of exports has been gradually declining. At the same time, the value of butter and cheese exports have been rising, despite these product representing a smaller share of the volume of exports. This has generally come about from the growing appetite for butter and cheese in Asian markets, including China, where NZ already have strong trade links.

NZ Trade Summary