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Quality Still Key Advantage For New Zealand Dairy Industry

Monday, 14 July 2014 at 12:58pm

China Dairy Farming

Photo: Forbes

There has been much talk about the recent Global Dairy Trade price drops, and the potential affect on New Zealand’s economy.  While much of the press has been negative, some economists and agricultural journalists are still reporting a bright future for dairy farming in New Zealand.

Some of the main points to consider when discussing dairy prices are this – the global demand for dairy is still increasing, along with the world’s population, and there is still a world shortage of dairy commodities.  This is particularly true when looking at China whose GDP grew 7.5%, in the last quarter, and whose middle class is forecast to grow by over 100 million in the next 10 years.  China’s demand for dairy is insatiable, and thanks to pollution and contamination there is a shortage of arable land to farm in China.

New Zealand still has a strong relationship with this market.  And despite China catching up with Dairy techniques and production they still have a long way to go to meet our world standards.  As Paul Lewis of the New Zealand Herald stated in a recent article “China lacks that grass which produces high quality milk…That is New Zealand's ace in the hole.”  He then goes on to say, “There is, too, one other statistic that underlines how long it will take Chinese companies to get anywhere near New Zealand's level as a producer. China wants to grow and consolidate its national dairy herd so that 70 per cent of its farmers have more than 100 cows. In 2008, only 20 per cent had more than 100. By mid-2013, they had reached 35 per cent.”

So for New Zealand dairy farmers the future remains bright, and if we allow price adjustments to happen over the next 12 months the forecasts still look positive for the industry as a whole. 

Read the full article by Paul Lewis