Milk production in New Zealand will rebound by 10% next year to a record high, feeding a recovery in exports – assuming the world's top exporter gets a break from the poor weather which has for two years sent output lower, according to AgriMoney.com.
New Zealand will in calendar 2011 produce 18.6 million tonnes of fluid milk, boosted by the continuing conversion of beef and sheep farms to dairy to capitalise on a revival in returns, the report said, citing the US Department of Agriculture’s Wellington bureau.
Adverse weather has prevented full production capacity and the country has "a pent up capacity to produce significantly more milk given the increase in land area devoted to dairy production, the increase in the number of cows and the ongoing genetic improvements to the national herd, the USDA was quoted saying.
This year drought, followed by spring floods, held back production in much of North Island, with South Island hit by unusually late and strong snowstorm last month.
The rebound in milk output will foster a 4.1% rise in exports of the four major products – butter, cheese, skimmed milk powder and whole milk powder - taking them back above 2 million tonnes, besides refilling inventories depleted to keep shipments going this year, the report added.
Growth will be particularly strong in skimmed milk powder, a major export to China, which overtook the US last year to become the top importer of New Zealand dairy products.
Indeed, this trade has been growing by an average of 28% a year over the last decade, boosted by China's growing taste for diary products - in particular foreign ones given the stain left on the domestic industry by the melamine poisoning scandal.
Exports to the Middle East, growing by 18-19% a year, and Africa, by 25% a year, have also been expanding notably quickly, helped by a focus by Fonterra, the New Zealand dairy co-operative giant.
The rate of conversions of New Zealand farms to milk production is expected to continue running at a rate of 70-80 enterprises over the next three or four years despite tight credit conditions, because of the relatively profitability of the sector.
Fonterra last month revealed its second-highest annual milk payout ever, for 2009-10, and helped by a recovery in dairy prices.
Indeed, dairy farms are expected to achieve a net profit of NZ$0.95 per kilogramme of milk solids for 2010, following a loss of NZ$0.91 per kgms the year before and a profit of NZ$1.65 per kgms in 2008.
New Zealand dairy dynamics, 2011, (year-on-year change)
Cows in milk: 4.85 million head, (+2.0%)
Milk production: 18.64 million tonnes, (+10.3%)
Domestic factory use:18.13 million tonnes, (+10.6%)
Butter exports: 461,000 tonnes, (+2.4%)
Cheese exports: 295,000 tonnes, (+3.5%)
Skimmed milk powder exports: 400,000 tonnes, (+12.7%)
Whole milk powder exports: 885,000 tonnes, (+1.7%)
-- Source: AgriMoney.com