Business Environment Profiles - New Zealand
Published: 16 May 2024
Domestic price of milk
110 Index
1.9 %
This report analyses trends in the domestic price of fluid milk. Data is represented as the consumer price index for fresh milk. The index has a base of 100.0, with 2020-21 designated as the base year. The data for this report is sourced from Statistics New Zealand (Tatauranga Aotearoa) and is presented in financial years.
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IBISWorld forecasts the domestic price of milk to fall by 0.5% in 2024-25, to reach 109.8 index points. According to the Dairy Companies Association of New Zealand, New Zealand exports over 95% of the milk it produces each year. Therefore, domestic milk prices are largely dictated by movements in the global dairy markets. Sluggish demand is set to drive a slight downward trend in global prices, which will flow through to a decline in the domestic price of milk in New Zealand.
Over the past five years, the pandemic has contributed to the price of milk inflating. Supply chain disruptions affected the global supply of milk, which also inflated global prices, especially as the price of shipping rose sharply during the 2022 calendar year. At the same time, domestic milk production faltered amid high costs and adverse weather. In particular, supply chain disruptions lifted the price of feed, which has constrained the global supply of milk. Production volumes fell globally, especially in 2021-22, including in New Zealand. Domestic supply conditions were also affected by poor weather conditions and temporary disruptions caused by COVID-19 restrictions.These conditions caused a sharp rise in the domestic price of milk in 2021-22 and 2022-23.
The value of exported milk has surged over the past decade. Rising income in foreign countries, particularly in China, has boosted demand for milk products, like UHT milk. The depreciating New Zealand dollar over the period has also assisted demand growth, making New Zealand milk products more affordable in global markets. Increasing demand from overseas buyers has placed upward pressure on domestic prices, contributing to issues in supply in the past few years. Overall, IBISWorld forecasts the domestic price of milk to rise at a compound annual rate of 1.9% over the five years through 2024-25.
IBISWorld forecasts the domestic price of milk to reach 109.4 index points in 2025-26, a 0.4% dec...
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