Although the recovery in the global dairy markets has slowed, a strong milk price in New Zealand is being forecast.

The minister responsible for New Zealand agriculture, Nathan Guy, was in Ireland recently and he spoke exclusively to the Irish Farmers Journal.

Minister Guy said both he and the New Zealand dairy industry remain positive about milk price in the medium to long term.

Prices last season dipped to lows of NZ$3.90/kg (17.5c/litre), which was down from NZ$8.75/kg milk solids (39.3c/l) in 2014.

“It [milk price] is $6/kg (26c/l) at the moment. We are forecasting that it will climb up to $7/kg (31.5c/l ex-VAT), maybe a bit above that, right out to 2020,” Guy said.

The minister said the reduction in global milk production has helped improve the outcome.

“It’s supply and demand, that’s basically what it is. The European Union is producing less milk, Ireland has produced considerably more and will continue to do so. New Zealand has produced considerably less because of heavier culling (of cows), focusing in on costs, less P (phosphorous) and K (potassium) in the system,” he said.

Whole milk powder (WMP) exports to China remain the most important product and market for New Zealand’s dairy sector.

Of New Zealand’s NZ$13.3bn (€8.3bn) dairy exports in 2016, NZ$2.8bn (€1.7bn) went to China.

However, Guy said the focus in New Zealand is about diversifying those markets.

“So we see the outlook still as very positive and we are all the time looking at diversifying our economies. We have got a very successful FTA (free trade agreement) with China. It’s a very important market, but we don’t want to have all our eggs in the China basket.

“We look all the time at new and emerging markets and we are trying to land an FTA with the Gulf States, obviously the European Union and we remain optimistic albeit less so than we were that we can salvage something from TPP,” Guy said.

You can read more from our exclusive interview with Minister Nathan Guy in next week’s Irish Farmers Journal.

Read more

Billion-litre milk surge

Majority of co-ops hold March price

Dairy market recovery ‘still delicate’ as EU peak production approaches

LacPatrick's steely resolve on Brexit