Manya Rathore
Research expert covering India
Dairy industry in New Zealand - statistics & facts
New Zealand has long prided itself as a dairy nation. Dairy is the country’s biggest primary industry export earner, generating a revenue of around 23 billion New Zealand dollars. While the industry’s economic contribution is significant, dairy farming profitability has fluctuated, largely influenced by rising operating costs and the farmgate milk price of Fonterra, the nation’s largest dairy cooperative. Dairy cattle are also major methane producers in the country. Recently, the government abandoned its plans to tax farmers on their emissions, a move welcomed by farmers but leaving the question of how exactly emissions can be curbed in the future open.
With a dairy export revenue exceeding 20 billion New Zealand dollars, New Zealand has established itself as a global leader in the dairy industry. The nation is the largest exporter of whole milk powder (WMP), with around 95 percent of the milk produced in New Zealand processed to be exported. China, Australia, Indonesia, and the United States were some of the country’s biggest trade partners for dairy products.
Fonterra’s strategy shift
Farmer-owned cooperatives process most of the milk produced in New Zealand. Recently, the country’s largest dairy co-operative, Fonterra, announced plans to divest its Consumer business, which will likely lead to a significant payout to its farmer shareholders. The company has stated it wants to strategically focus on its Ingredients and Foodservice business segments, both of which reported a larger EBIT from continuing operations than the Consumer business. In the 2024 fiscal year, Fonterra reported a net profit after tax of over 1.1 billion New Zealand dollars.New Zealand’s dairy economy
A wide variety of dairy products are produced, consumed, and exported in New Zealand, including fluid milk, milk powders, butter, cheese, and infant formula. New Zealand has a large population of dairy cattle to produce high volumes of milksolids required for these dairy products. The nation operates mainly pasture-based farming, with large herds and large-scale processing facilities. Most dairy farmers are owner-operators, with a smaller fraction being 50:50 sharemilkers. In terms of dairy farm operating expenditure in New Zealand, feed and labor were two of the highest cost contributors. Overall, the operating profit per kilogram of milksolid has increased over the past five years, despite a dip in the latest year.With a dairy export revenue exceeding 20 billion New Zealand dollars, New Zealand has established itself as a global leader in the dairy industry. The nation is the largest exporter of whole milk powder (WMP), with around 95 percent of the milk produced in New Zealand processed to be exported. China, Australia, Indonesia, and the United States were some of the country’s biggest trade partners for dairy products.
Environmental challenges remain
While the New Zealand dairy industry reportedly has one of the smallest carbon footprints in the world, little has changed in terms of overall dairy farming greenhouse gas emissions. The current government has focused its efforts on reducing emissions using technology and excluded the agriculture sector from its national carbon pricing system. While biotechnologies such as methane inhibitors, animal vaccines, and gene-edited grasses have the potential to reduce farm emissions while keeping productivity high, the development stage across these technologies varies. In the short term, this may not be enough to reduce emissions to meet climate targets.
