Ray Smith: Dairy still has growth potential despite flat export outlook
Ministry for Primary Industries (MPI) Director General Ray Smith believes there is potential for an increase in dairy farming in New Zealand.
Add to that the positive Global Dairy Trade result two weeks ago, there's a lot to be smiling about in the sector.
Fonterra is forecasting a milk price range with a mid-point of $9/kgMS, with Westpac predicting $9.30/kgMS.
While it's the first auction of the year and there's a lot of water to flow under the bridge, farmers are still in a fairly good place with around a $9 milk price, analysts say.
Ministry for Primary Industries director general Ray Smith is also positive, adding that there is potential for an increase in dairy farming in NZ.
He notes that the growth that NZ has got from the dairy industry is phenomenal and says at present its growth is only being outstripped by the kiwifruit sector.
But changes in the Resource Management Act (RMA) pursued by the Government will allow for more diversification from other sectors into dairy farming.
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Tempering this, export revenue from dairy for the year ended June 2026 will be up by a mere 1% on the previous year and is likely to remain at the present level in the following 12 months.
MPI attributes this to global supply outstripping demand. However, things are changing; farmers in the northern hemisphere are starting to feel the pinch of falling milk prices.
The days of boosting production to cash in on the high milk price may be coming to an end. With demand still firm, lower supply will put upward pressure on milk prices.
That will only mean more good news for NZ dairy farmers.
