The New Zealand dairy food market has been forecast to increase at a compound annual growth rate (CAGR) of 2.28% over the next five years, increasing from a valuation of over NZD 600 million in 2012, to reach a total in 2017 of just under NZD 700 million.
A significant industry, dairy represents a quarter of all New Zealand merchandise exports. New Zealand is the world's largest exporter of dairy commodities, representing approximately one third of international dairy trade each year.
In terms of categories, 'Milk' is the leading sector, with the 'Cheese' sector a distant second. The fastest growing category in New Zealand's dairy food market is forecast to be the 'Butter & Spreadable Fats' sector, which is predicted to grow at a CAGR of 4.17% through to 2017.
The evolution and performance of the NZ dairy industry is strongly shaped by a number of key factors including favourable endowment of natural resources for grass production and farmers' strong ideology towards control and ownership of downstream manufacturing and marketing activities, which led to vertical integration and continuous organisational changes.
In terms of industry structure, dairy co-operatives have been part of New Zealand's history since 1871 when the country's first cheese company was created on Otago Peninsula. Like co-operatives all over the world, they were established to create the power that comes from pooling resources.
Although New Zealand only accounts for two percent of world dairy production, the country exports over 95 percent of all its national production. This is in sharp contract with the global trend where around 95 percent of total dairy production is usually consumed within the country of origin.
About half of New Zealand's recorded dairy exports are value‐added products and New Zealand's total export value for dairy has significantly increased between 2006 and 2009.
Dairying is becoming more corporate in New Zealand, but the majority of farms are still owner-operated and younger, professional managers are coming in. Contract milking, leasing, share-milking and equity positions have become positive career routes for young farmers.
For more information on New Zealand's dairy food industry, see the latest research: New Zealand's Dairy Food Industry
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