Milk powder.
May 20, 2016

Low Milk Prices Impacting New Zealand, Too

 |  By: Jim Dickrell

Low milk prices in New Zealand are having an impact on profitability, herd size and milk production, says USDA in its May Global Agricultural Information Network report.

“Dairy farmers are now in the second year of below breakeven farmgate milk prices and have cut the national dairy cow herd number over the last 18 months by 5% to 4.9 million head,” the report says.

Milk production in 2016 is expected to fall 4.5% from its peak in 2014. “Very low farmgate milk prices ($10 to 12.75/cwt) are likely to continue into fiscal year 2017 and could even stretch into 2018, according to industry participants.”

And unless milk prices climb back to $15/cwt, the “right sizing” of the New Zealand national herd will likely continue into next year.

To be competitive, New Zealand manufacturers are emphasizing cheese, casein and milk protein concentrate production, and are scaling up ultra-high temperature fluid milk production. For example, cheese exports are projected to climb 14% in 2016, and casein exports are expected to be up 33%. Whole milk powder, New Zealand’s specialty, is expected to decline 1.4%.

Read the full report here.