New Zealand looks to change its export focus
With a limited home market of only 4.7 million people, roughly the same as the Republic of Ireland, about 95% of dairy production in New Zealand goes to export markets.
According to AHDB Dairy, further growth in New Zealand milk production will be constrained by the availability of land and environmental pressures around water quality and nutrient management.
Value vs volume
According to its Trade Envoy, Mike Petersen, the limitations on production growth means the New Zealand industry needs to shift its focus towards increasing the value of exports, rather than pushing for higher 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.
Meanwhile, The overall price index recorded at the latest Global Dairy Trade (GDT) event decreased by 5.0%. This follows a 1.2% decrease at the previous GDT.
Whole milk powder (WMP) accounted for roughly half of the product sold, while skimmed milk powder (SMP) makes up for a quarter of the total volumes sold.
At the latest auction, WMP prices decreased by 7.3% to US$2,905/t; SMP prices decreased by 4.6% to US$1,913/t; butter prices fell by 4.0% to US$5,390/t and cheddar cheese prices fell by 4.3% to US$3,713/t.
The next auction is due to take place on Tuesday, July 17, 2018.