
High Milk Prices Drive NZ Success as Australia Battles Red Tape & Price Suppression.
The competitive landscape of the Trans-Tasman dairy industry has seen a dramatic role reversal over the past two decades. Once the envy of the world, Australian dairy now finds itself struggling compared to its thriving New Zealand counterpart. This stark contrast is highlighted by production figures: Australia’s milk pool in 2023-24 was 8.37 billion liters, dwarfed by New Zealand’s more than double output at 20.5 billion liters. This significant shift in dairy economics demands attention from the international dairy community.
According to Ben Bennett, President of Australian Dairy Farmers and a former Kiwi farmer who moved to Australia decades ago, a combination of factors beyond just drought and floods has taken a severe toll on the Australian sector. He points to escalating bureaucratic red tape, the offshoring of processor management, and aggressive supermarket suppression of milk prices as key contributors to Australia’s decline. This agribusiness expert suggests that governments have largely ignored the plight of dairy farmers, exacerbating their challenges.
In contrast, New Zealand dairy farmers are experiencing a robust 2024-25 season, largely buoyed by strong milk payouts. Karl Dean, the recently elected Federated Farmers NZ dairy chairman, noted that while last season saw variable production gains and losses across regions – with some areas facing wet springs and others early droughts – the overall outlook is positive. The high payout has provided a crucial financial buffer for producers, mitigating the impact of localized underperformance and ensuring stability for the NZ dairy industry.
Despite the positive outlook and strong payouts, Kiwi dairy farmers are not immune to rising operational costs. DairyNZ data indicates that the national break-even milk price is forecasted to increase from $8.41 per kilogram of milk solids in 2024-25 to $8.68 per kilogram in 2025-26. However, DairyNZ emphasizes that robust milk price forecasts, combined with reduced debt levels and easing interest rates, mean the overall outlook for the 2025-26 season remains positive for New Zealand dairy producers.
This “role reversal” between the two nations offers vital lessons for dairy producers, manufacturers, and analysts globally. While climate challenges are common across the Tasman, the divergence in industry health underscores the profound impact of policy, market dynamics, and processor-retailer relationships on farmgate profitability and national production. The New Zealand model, with its strong payouts, provides a compelling example of resilience and success in the face of ongoing environmental and economic complexities within the global dairy market.
Source: Weekly Times Now: New Zealand dairy thrives in 2024/25 season with high prices
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