Strong world markets good for NZ dairy: Report

NEW ZEALAND - Despite a softening of global dairy prices from the highs of 2005, the outlook for New Zealand's dairy exports remains resoundingly positive.
calendar icon 16 November 2006
clock icon 2 minute read

According to a Thursday released report by Rabobank, the world 's leading speciality food and agribusiness bank, growth is likely to be outside of the traditional markets, driven by developing countries with increasing affluence moving toward more westernized diets and recognition of the health benefits of dairy products.

Hayley Moynihan, Senior Analyst of Rabobank Food and Agribusiness Research, said the past ten years have been a " honeymoon" period for the New Zealand dairy industry, with dairy conversions, record production levels, the formation of Fonterra, the No. 1 dairy industry, and the emergence of new processors, topped off more recently by stellar international commodity prices.

Buoyant economic growth continues to bolster demand for dairy products. Rabobank is anticipating growth of around three per cent per annum in the global market over the medium term.

The interesting question, said the report, is where production will come from to supply this growing global demand. The European Union has changed the structure of subsidy payments to farmers, resulting in stable production. Australia is battling with drought and this is restricting expansion. Even in New Zealand farmers are facing challenges. This may open the way for newer exporters, such as Argentina or even the Ukraine.

The Rabobank report said New Zealand is in an excellent position to grow its share of emerging markets, not only in the Middle East, but Asia as well.

Total milk production in New Zealand has increased by five percent per annum, on average, over the past 10 years, driven by advances in farming systems and technologies, improved pasture management, genetics and cheaper land converted in the South Island. The challenge is to keep up the momentum.


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