Melkplas New Zealand is at its limit

After 20 years of unbridled growth for the New Zealand dairy industry, the tide will soon turn. At least, that is Rabobank's expectation. According to the bank, this is mainly due to the fact that the country's environmental limits have been reached.

An annual growth of 'only' 5% is expected in the next 1,6 years, the New Zealand news platform reports. Stuff. That is a different picture than in the past 20 years, because in those years milk production doubled and grew by 4,1% annually. Rabobank already saw that growth weaken 5 years ago. However, it took longer than expected before the turnaround finally took hold.

The figures come from the report'Survive or Thrive', in which Rabobank looks ahead to 2022. According to analyst Emma Higgins, the turnaround in the dairy market has major consequences for the chain. The shrinking dairy herd will, among other things, mean that dairy processors will have difficulty filling their existing and planned capacity in the coming years. That will lead to caution with regard to making investments.

shrinkage on the North Island
The dairy herd in New Zealand decreased by 2018% in 0,7 to 5,01 million cows. What is striking is that the number of cows on the North Island decreased by 2,8%, while the dairy herd on the South Island increased by 2,8%. The North Island has traditionally been the core of dairy farming, but now 40% of the milk production comes from the South Island.

Despite this flattening growth, Rabobank does not expect livestock farmers to benefit directly from the high milk price. This is because New Zealand is highly dependent on dairy exports; in particular to China, so the volatility in the world market will continue to be felt. It forces livestock farmers to produce at a low cost price.

Dairy farmers with a competitive cost price probably benefit most from the growing competition between the various milk processors. In addition, the prospects are more favorable for farmers who invest in pasture milk and sustainability aspects, among other things. So will Fonterra, by far the largest dairy cooperative in the country, will focus on sustainable milk flows in the coming years.

Number 7 in the world
New Zealand is the seventh country in global milk production, producing 22,2 million tons per year. The top 3 is formed by India (174 million), Europe (160,9 million) and the United States (100,1 million). In terms of dairy exports, New Zealand is the second largest player after the European Union.

Jeanette Pennings

Jeannet has her roots in the flower bulb sector and she grew up on an agricultural company in the northern part of North Holland. As a generalist she reports for Boerenbusiness across all sectors. She is also exploring the possibilities of sponsored advertising.

j.pennings@boerenbusiness. Nl

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