New Zealand dairy thrives in 2024/25 season with high prices

Australian dairy used to outperform its Kiwi cousin. So what changed? Farmers say many factors are at play.

Kiwi dairy farmers were leaving the Land of the Long White Cloud a generation ago for pastures new on the westside of the Tasman.

Australia’s milk production was at an 11 billion litre peak in the early 2000s, deregulation was in the works and the Australian industry was dominated by profit-sharing co-operatives.

A quarter-century later, the grass is not as green on the Australian side — and the colour of Australian farmgate is nowhere near as golden.

Originally from New Zealand, Australian Dairy Farmers president Ben Bennett was one of many Kiwi farmers to make the move in the 1990s and 2000s.

He said the Australian dairy sector was the envy of the world at the time but a combination of bureaucratic red tape, processor management offshoring and supermarket suppression of milk prices had taken its toll.

“It’s a pretty stark contrast — Aussie and Kiwi dairy have had a role reversal in the past 20 years,” Mr Bennett, who farms at Pomborneit in southwest Victoria, said.

“You can only blame drought and floods to a degree, as bad as both have been.

“Governments have ignored the plight of dairy farmers for years. Not only that, the red tape and bureaucracy has grown substantially.”

Cows grazing at the foot of Mount Taranaki in New Zealand

While New Zealand’s milk production numbers have been ahead of Australia for nearly two decades, the gap has widened substantially since the 2016 Australian clawback by Fonterra and Murray Goulburn.

With the 2024-25 milk pool figures yet to be released, the most recent 12 month picture is still stark — Australia’s milk pool in 2023-24 clocked in at 8.37 billion litres while New Zealand’s was more than double at 20.5 billion litres.

Farm numbers are tabulated differently depending on what side of the Tasman you are on. Dairy Australia reports the number of dairy farms nationwide at 3889 operations while DairyNZ counts their herds at 10,485 across the North and South islands.

What can be compared directly is the nationwide dairy herd, with NZ leagues in front at 4.7 million dairy cattle compared to Australia’s 1.3 million milking cows.

Mr Bennett’s NZ lobby equivalent is North Canterbury dairy farmer Karl Dean, who was recently elected as Federated Farmers NZ dairy chairman.

Farming at Leeston by the shores of Lake Ellesmere, about 40km southwest of Christchurch, Mr Dean said production gains and losses were highly variable last season.

“Southland and Otago endured a very wet spring with almost constant rain, which suppressed grass growth and milk yields early on,” Mr Dean said.

“Then the North Island got hit by drought later in the season, which meant that although it was a great grass-growing season, many areas saw a slight increase in production of between 1 and 2 per cent, a few areas had a big jump of 8 or 9 per cent.

“Overall, like Australia, New Zealand had its own ‘hot spots’ of under‑performance compared to the previous season.”

While some parts of Australia remain green, parts of Victoria and South Australia have battled with drought. Picture: Zoe Phillips

DairyNZ recently crunched its national data and calculated that the Kiwi break-even milk price had risen from $8.41 per kilogram milk solids in the 2024-25 season to a forecasted $8.68 per kilogram milk solids in the 2025-26 season.

A spokeswoman for Dairy NZ said despite the elevated costs, “the outlook for the 2025-26 season remains positive, with robust milk price forecasts, and farmers likely to benefit from reduced debt levels and easing interest rates”.

Aside from price, Kiwi farmers do have some commonality with their Australian equivalents on climate.

In the North Island, several regions — including Northland, Waikato and Taranaki — experienced drought conditions from February onward.

Dairy NZ said while dry summers weren’t unusual in those areas, the dryness arrived earlier than usual this year. Many farmers, particularly in Taranaki, relied on additional supplements to support production through to the end of the season.

“All in all, it’s been a good season for New Zealand dairy,” Mr Dean said.

“It’s variable, as always, but buoyed by a strong payout.

“For those hit by tough weather or lower production, that payout provided a valuable buffer.”