New Zealand dairy exports experience decline amid market shifts

NEW ZEALAND – New Zealand’s dairy exports, including milk powder, butter, and cheese, experienced a notable decline of 10% in June, amounting to US$900 million compared to the previous year, according to the statistics department, Stats NZ.

The drop contributed to an overall 0.1% fall in goods exports, which totaled US$3.73 billion. However, goods imports fell by 13% to US$3.31 billion, resulting in a trade surplus of US$420.79 million.

Earlier in May 2024, the Foreign Agricultural Service (FAS) in Wellington forecasted New Zealand’s fluid milk production to be 21.2 million metric tons (MMT) in the 2024 market year (MY).

This is a decrease on the previous 5-year average of ~21.6 MMT, reflecting the decreasing herd numbers and the short-term effects of the following: El Niño weather pattern, softening revenue, high cost of debt servicing, and challenging feed and fertilizer prices.

However, FAS/Wellington forecasted export growth in butter, anhydrous milk fat (AMF), skim milk powder (SMP), and cream products for 2024.

In recent years, New Zealand milk processing companies have shifted their focus from drying milk powder to producing fresh products like butter, cheeses, and creams. While butter remains the leading dairy export, its share has decreased from 45% of total dairy exports in 2018 to 41% in 2023.

According to FAS/Wellington, significant investment by New Zealand milk processing companies has shifted their processing capabilities from drying milk powder to more fresh products such as butter, cheeses, and creams in recent years.

This recently observed trend is in exports, where WMP has decreased from 45% of the total volume of dairy exports in 2018 to 41% in 2023.

Despite the decline in some dairy exports, there has been an increased capability for more specialty products such as infant formula (IMF), protein concentrates, lactoferrin, caseinates, creams, butter, and cheeses.

The shift in export strategy aligns with global trends emphasizing high-value dairy products. As New Zealand adapts to changing market demands, its dairy industry remains poised for growth in specialty sectors, even amidst challenges in traditional export categories.

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