New Zealand: Third milk price increase in 2 months announced
Milk prices in New Zealand are soaring. Compared to previous decades, farm-gate prices have doubled in recent times. The cause of this rapid development is the strong global demand for dairy products. Milk powder exports to China have played the main role, with annual growth rates of 10% in the last 5 years.
Nevertheless, with a per capita consumption of 10 kg, China lags far behind other countries such as Japan with 32 kg or the USA with 78 kg. The high consumption volumes are due to the large population with a growing proportion of higher-income groups.
The current dairy year starting in August 2013 is off to another promising start. Sufficient rainfall has ensured the necessary grass growth, and New Zealand's milk production is based on forage.
However, the exploding development also poses structural problems. Not all dairy products benefit to the same extent from powder price increases. It is not easy to find the right balance between the individual product segments. The distribution of profits at the individual marketing stages is also not running smoothly. Branches in China and shareholdings are distributed among investors as far away as the USA. A dairy farm with 10,000 cows is to be built in Shandong, China, in the next two years.
