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Favourable Conditions for NZ Dairy Industry

26 July 2012

NEW ZEALAND - Favourable climatic conditions contributed to good pasture growth in the March quarter and production gains in the dairy (milk yield per cow), however these gains did not correspond to an increase in export revenue for these sectors. A stronger New Zealand dollar, coupled with easing international dairy prices, saw dairy export revenues plateau at $3745 million.

The Ministry for Primary Industries has released a new combined primary industry quarterly report, comprising production and trade statistics for the Dairy, Meat and Wool, Forestry and Seafood industries. It replaces separate quarterly reports for forestry and seafood that were previously released by the Ministry.

The primary sector continued to be an economic driver, with total primary sector exports accounting for 71 per cent of all merchandise exports in the year to March 2012.

Production of milk solids increased 11.5 per cent in the March 2012 quarter to 511 000 tonnes, and 13.2 per cent in the year to March 2012 (to 1 655 000 tonnes). This phenomenal increase was due to favourable climatic conditions boosting milk yield per cow, and an increase in cow numbers.

Despite higher production (and slightly higher export) volumes, dairy export revenues were steady at $3745 million in the March 2012 quarter, as a result of a stronger New Zealand dollar against the United States dollar and easing international dairy prices.

Changes in export revenue for different dairy commodities were mixed. Export revenue from cheese increased 11.4 per cent, due to a large increase in export volume partially offset by a decline in price. For skimmilk powder and casein, improvements in both volume and price contributed to 10.7 and 7.8 per cent increase in export revenues respectively.

Both wholemilk powder and butter experienced a 4.6 per cent decrease in export revenue. Wholemilk powder export volume was static as a decrease in demand from China balanced by increases from OPEC members and other Asian countries. The significant drop in the butter price stimulated a large increase in demand. However, it was not enough to offset the price fall.

Further Reading

You can view the full report by clicking here.

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