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New Zealand’s dairy industry

New Zealand’s dairy industry. Hon. John Luxton Chairman DairyNZ. Introducing NZ dairy farming. DairyNZ tvc. New Zealand is 1/10 th the size of Argentina. Mercosul & NZ milk production. Source: IBGE, SAGyPA Indicator Series, ODEPA, OPYPA, LIC, FAO

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New Zealand’s dairy industry

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  1. New Zealand’s dairy industry Hon. John Luxton Chairman DairyNZ

  2. IntroducingNZ dairy farming • DairyNZ tvc

  3. New Zealand is 1/10th the size of Argentina

  4. Mercosul & NZ milk production Source: IBGE, SAGyPA Indicator Series, ODEPA, OPYPA, LIC, FAO Notes: 1) NZ base year is 2000/01 season.

  5. Brazil Dairy Industry Background International milk prices Source: LIC,USDA, ODEPA, OPYPA, ESALQ

  6. Dairying in New Zealand • 1.46 million ha used • >85% grazed pasture • 16.5 billion litres • 8th largest producer • Only 2.3% of world production

  7. Dairy Industry comprises ~25% of NZ’s export receiptsMilk price = international price… no tariffs and support

  8. NZ dairying statistics

  9. How we compare IFCN 2010 Dairy Report

  10. NZ dairy farms vs Brazilian (Goiás) farms

  11. Calving is seasonal 100 Conservation required Supplement required 75 Pasture (kg DM/ha per d) Demand 50 Feed supply 25 Spring

  12. The farming structure is evolving towards bigger farms and fewer farmers Source: LIC Dairy Statistics, DairyNZ Economics Group

  13. Production by herd size 2009-10 Source: DairyNZ Economics Group

  14. Milksolids production 6% 28% 7% 11% 9% 4% 18% 17%

  15. NZ Export Markets Source: Statistics New Zealand, DairyNZ Economics Group

  16. Major processing companies • Fonterra Cooperative Group: • 90 percent of milk supply and exports • 40 percent of the domestic consumer market • 2 other co-operatives: • Tatua • Westland • 5 other processing companies: • Open Country Dairies • Synlait • New Zealand Dairies • Goodman Fielder • Farmers own 95%+ of processing capacity

  17. Regulatory framework

  18. DIRA • Open entry and exit • Contracting rules • 20% rule • Raw milk regulations

  19. Fonterra milk price model • Calculates revenue if all milk was processed into basic commodities & sold overseas • Deducts shipping, processing & freight costs • Balance paid to farmers as milk price • Value add – eg selling premium ingredients/ investment in consumer brands – treated as profit • Farmers receive profit as dividends on their Fonterra shares, plus price paid for raw milk

  20. Looking ahead • Dairy making large & growing contribution • Global supply/demand supports NZ growth • On-farm business success $83/ha/yr • Erosion of NZ’s low cost base poses threat • Imperatives for productivity improve remain • Public & consumers driving sustainability • Public perceptions about dairy are mixed • Skilled people increasingly important • Unified approach to innovation & adoption

  21. Questions? Improving productivity

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