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July 10, 2018

New Zealand Milk Prices Now Highest in World

 |  By: Jim Dickrell

New Zealand’s close proximity to growing Asian markets and its ability to tailor milk formulations to customer needs has yielded the highest milk prices for its farmers in the world.

 

Currently, New Zealand milk prices are at $18.64/cwt in U.S. dollars compared to $16.82 in Europe, and $15.45 in the United States and Australia.

 

Because of its small population, New Zealand exports 90% of its milk production, mostly in the form of milk powders specifically formulated to meet customer needs.

 

Earl Rattray, a former director of New Zealand’s large dairy cooperative Fonterra, also credits Fonterra for New Zealand’s strong milk prices, according to New Zealand’s Rural News. “It’s an extraordinary situation where Fonterra is able to get the full value of milk fat, which is now worth 1.3 times more than protein,” he told Rural News.

 

“Not every farmer in the world is getting those values passed back to them but Fonterra supplying farmers are getting them. I think this shows the true value of having a farmer-owned organization of scale with product mix flexibility and a completely independent milk price.”

 

Critics of New Zealand dairy policy say Fonterra has monopolistic-like powers to set internal milk prices, which then allows it to out-compete others for export markets. That was one of the reasons the National Milk Producers Federation first opposed the Trans-Pacific Partnership agreement, which NMPF feared would have given New Zealand almost unfettered access to the U.S. market.

 

Fonterra is not without its own problems and internal critics, with some farmers leaving the co-op and joining smaller competitors. For the most part, though, New Zealand has shown remarkable success  considering that it is almost wholly dependent on the world market while other countries struggle to adapt.

 

 

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