Despite estimated increases to revenue from Dairy Farming exports and higher than average farmgate payout, high farm expenses (especially interest rates and fertiliser costs) are constraining farm profits. The Dairy Farming industry is experiencing the largest increase in input costs on average. Although the growth in farm expenses is projected to slow, it will remain elevated over the medium term, and this could limit the ability of the sector to invest in farm improvements. Revenue for Dairy farmers depends heavily on milk production and prices. National milk production has fluctuated due to volatile weather conditions and a slump in the national dairy cattle herd.
Export Revenue
Dairy Farming accounted for 44% ($25 billion) of total export revenue in the food and fibre sector for the year ending March 2023. China was the largest export market for all dairy products (34%), followed by Indonesia (6%).
Export Revenue from Dairy Farming is expected to continue to grow although at a steadier rate across June 2021-2023. The expected increase in revenue for 2023 is driven by a weak New Zealand dollar and an increase in the exports of dairy products with higher value such as infant formula.
Across individual Dairy products, forecast export revenue fluctuates. Over the years, whole milk powder has contributed the most to Dairy exports, followed by butter, anhydrous milk fat and cream.
GDP Trend
The estimated contribution to GDP by the Dairy Cattle Farming industry was approximately $5.9 billion in 2022 – 2023 which was a steep 28.5% decrease from 2021-2022. The GDP estimate is forecast to decline in 2023-2024 but might gradually recover in 2024–2025. The estimate for this industry refers specifically to Dairy Cattle Farming and does not include the processing, manufacturing, or retailing of dairy products.
2. IBISWorld, “Dairy Cattle Farming in New Zealand,” Industry Report (New Zealand: IBISWorld (access is by subscription only), October 2023), https://www.ibisworld.com/