New Zealand-Australia dairy comparison: Is the trans-Tasman race changing?
New Zealand’s dairy sector has been running streets ahead of Australia for some time — but that’s changing. We compare the pair.
New Zealand has reached “peak milk” — according to one of the country’s top dairy executives — with its dairy production near capacity.
With a decade of national herd figures that outpace Australia by a country mile, Fonterra chief financial officer Marc Rivers said he couldn’t see the volume of milk that New Zealand produces increasing again.
He told Radio New Zealand: “so, I guess we could go ahead and call that peak milk”.
Mr Rivers said productivity gains could offset some of the losses of dairying land but the NZ industry wouldn’t see the same level of growth it had enjoyed over the past decade.
As a result, he predicted the volume of milk produced in New Zealand would flatten or decline in the coming years.
“We don’t see any more land conversions going into dairy - that’s quite a change from before,” Mr Rivers said.
New Zealand’s national dairy herd reached a peak of more than 5 million in the 2014-15 financial year and has declined by only 1.93 per cent to the most recent figure of 4.921 million in 2019-20 season.
By comparison, Australia’s national dairy herd was 2.74 million back in the 2014-15 financial year and the most recent figure stands at 2.36 million — a 13.3 per cent contraction during the same time frame.
United Dairyfarmers of Victoria president Paul Mumford said the financial position of south-eastern Australia relative to New Zealand had rebalanced during the past six to 12 months after a long period of Kiwi success.
“Prices paid in New Zealand were far ahead of Australia for some time. That was particularly noticeable when (Australia) went through the 2016 clawback,” he said.
“Many dairy farmers in Victoria have decided to leave the industry in the past three to four years but the strong prices we’re now seeing at the farmgate may change that dynamic.”
Last week, thousands of farmers descended on dozens cities across New Zealand in their tractors in a nationwide protest against new environmental regulations.
Auckland’s motorways were gridlocked during the Friday protests with farmers in Whangarei taking over a sporting field and a five-kilometre long convoy made its way through Dunedin.
“New Zealand farmers are under a lot of pressure over environmental regulations and that’s happened only recently,” Mr Mumford said.
“So those changes when it comes to social policy may change the game for NZ dairy.”
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