New Zealand Dairy Exports: The Super-Simple Guide!

“At $15.5 billion dairy exports make up almost a third of New Zealand’s annual merchandise exports.” Graeme Wheeler in a speech given to Dairy New Zealand in Hamilton, 7 May 2014.

Dairy Cows Making Milk

Think of New Zealand's economy as a big pie, and for a long time, dairy was the biggest slice, making up about a third of everything New Zealand sold to other countries. Back in 2014, that was a huge chunk of change – we're talking $15.5 billion from dairy exports alone!

Why is dairy such a big deal for New Zealand? 

Well, it's like their main cash crop. It brings in tons of foreign money, which helps the whole country tick. But it's not just about the money from selling milk and cheese. Dairy farming supports a massive chain of other businesses: factories that process the milk, trucks that transport it, scientists who figure out better ways to do things, and thousands of jobs in both the countryside and the cities. People around the world love New Zealand's dairy, so there's always a steady demand, which means a stable income for many New Zealanders.

Dairy: Still King, But Other Players Are Growing!

Even though dairy is still super important, its slice of the pie has gotten a bit smaller over time. It's not that dairy is doing badly, it's more like other parts of New Zealand's economy are growing faster! Imagine your pie now has more flavors – things like juicy fruit, tasty meat, wood products, and even high-tech digital stuff are all selling more internationally.

Also, New Zealand farmers are becoming more focused on being "green" and sustainable. This means they're not just adding more cows; they're making sure they produce dairy efficiently and responsibly. Plus, what's happening with milk prices globally and how much certain countries want to buy can also affect how big dairy's slice looks. Basically, New Zealand's economy is becoming more diverse, which is a good thing – it means they're not putting all their eggs (or milk!) in one basket.

The Big Picture: What's New Zealand Selling?

For the year ending March 2024, New Zealand sold a whopping $74.1 billion worth of stuff to other countries – that's a big jump from the year before! While dairy is still at the top of the list, they're also selling a lot of meat, wood, fruit, and wine. Looking ahead to mid-2025, some experts even think dairy exports could hit $27 billion, potentially making up an even bigger chunk of their total exports again. No matter the exact numbers, dairy consistently remains New Zealand's single biggest export product group, showing just how vital it is.

Where Does New Zealand Dairy Go?

New Zealand has been selling its dairy products for over 170 years and ships them to more than 140 countries! They're known for being a reliable source of safe and sustainable dairy. A few years ago, their biggest customers were China, Australia, the US, Japan, and Malaysia.

It's interesting to note that the United States has become a much bigger player in dairy exports too, catching up to New Zealand and the European Union.

China's Big Milk Shake-Up and New Zealand's Smart Moves

Lately, something big happened: China, a huge buyer of milk powder, started buying much less whole milk powder since 2022. This was a big deal for New Zealand because China was their main customer for this specific product. Imagine your biggest customer suddenly cutting their orders way back!

But New Zealand didn't just sit there. They got really smart and flexible. Instead of just making whole milk powder, they started making more skim milk powder and butter. And here's the clever part: they aggressively started selling these new products to Southeast Asia.

Southeast Asia.

This move is actually putting pressure on the US dairy industry. New Zealand's sales of skim milk powder to Southeast Asia have soared, while US sales to the same region have actually gone down. It shows that New Zealand is really good at finding new markets when faced with challenges.

New Zealand's Impact on US Dairy Exports

You can already see New Zealand's competitive spirit in the US dairy export numbers. The US actually saw a drop in their dairy exports in 2023, and one of the big reasons was increased competition from both New Zealand and the European Union. Specifically, when China bought less whole milk powder, New Zealand simply changed what they were making and sent it to markets that the US also targets.

Even though the total value of US dairy exports in 2023 was still very high, it was a decrease from their record year. This decline happened across many different dairy products, and even in places like Japan and South Korea, where the US usually sells a lot of cheese, New Zealand (and Europe) gave them tough competition, partly due to pricing. This just proves that New Zealand has a strong presence and can offer good prices in these important Asian markets, which are also valuable to the US.

Broader Economic Ripple Effects

While the direct impact on New Zealand's overall economy might be manageable (as the US isn't the only market, and other industries are growing), tariffs contribute to a less predictable and potentially slower global trading environment. New Zealand, as a trading nation, thrives on open and stable trade. Any trade war or increased protectionism can create uncertainty, which can affect investment, business confidence, and overall economic growth.

In essence, US tariffs make it harder and more expensive for New Zealand dairy to compete in the American market, potentially forcing New Zealand dairy producers to find new customers or accept lower returns.

The Takeaway

The continuing dip in China's dairy demand is creating ripples across the entire global dairy market, directly affecting US dairy exporters. But New Zealand's quick thinking and ability to switch what they make and find new customers, especially in Southeast Asia, makes them a very strong competitor. The US dairy industry needs to pay close attention to what New Zealand is doing because if China's demand stays low, New Zealand could become an even bigger rival in markets that the US considers its own "prime" territory. Understanding and reacting to New Zealand's changing game plan will be crucial for the US dairy industry to succeed in this shifting global landscape.

Grass into Cash