[This post was first published in the Fairfax NZ Sunday Star Times on 12 October 2014]
The latest Global Dairy trade auction of 1 October has placed a new complexion on the current dairy downturn. There is now widespread concern that the downturn is going to be longer and deeper than almost everyone had expected.
Rabobank’s latest quarterly report on global dairy prospects is also just published and there is no good news in that. Rabobank is suggesting it could be the later part of 2015 before there is a substantial turnaround.
European and American production are both increasing. New Zealand production is also buoyant. On the demand side, Russia has shut the gates on dairy imports from Europe because of the Ukrainian crisis. The Chinese are still buying but not fast enough. The dollar is high and may stay that way, despite efforts by the Reserve Bank to nudge it down. Continue reading
[This post was written primarily for Australian readers at the request of 'The Conversation', an online daily newsletter. It was published in 'The Conversation' on 8 October 2014 and from there published elsewhere in Australia under a Creative Commons license. For the original article go to:
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Global demand for internationally traded dairy products is now dominated by China. Although Australia has benefited from this, with annual dairy exports to China now worth over A$500 million, the growth has been much slower than what New Zealand has achieved.
Latest New Zealand statistics to June 2014 show annual dairy exports to China of A$5.05 billion (NZ$6.05 billion). These exports have increased more than tenfold since 2008. Continue reading
[This post was first published in the Fairfax NZ Sunday Star Times on 5 October 2014]
This last week I have been analysing the opportunities for the Australian dairy industry arising from an FTA (free trade agreement) with China. The FTA is still being negotiated, but the chances of an agreement in the coming months are good. A key insight has been that Australia will then have a clear competitive advantage relative to New Zealand in relation to fast moving consumer goods such as UHT milk, ice cream, soft cheeses and dairy desserts.
It all comes down to issues of seasonality. New Zealand is the only developed country in the world where the dairy industry is predominantly seasonal. [A correction and apology to my Irish friends. Ireland has a dairy industry, about one quarter the size of the New Zealand industry which is also predominantly seasonal. They focus on butter, hard cheeses and other products which have long shelf lives.] Continue reading
[This post was first published in the Fairfax NZ Sunday Star Times on 28 September 2014]
In the last six years the Chinese infant formula market has grown threefold to about $NZ18 billion. Some projections suggest it could double again within the next six or so years. So the challenge is not the size of the market. Rather, the challenge is that everyone is trying to get a slice of it. Continue reading
This is the fourth in the ‘China series’ of articles written for the journal Primary Industry Management by Xiaomeng (Sharon) Lucock and myself. It was published in September 2013.
As with other products to China, the statistics have moved on in the last year but the drivers of change are similar.
In the last year since the Primary Industry Management paper was written, New Zealand’s total dairy exports to China have increased from $NZ2.9 billion for the 12 months ending 30 June 2013, to NZ6.05 billion for the 12 months ending 30 June 2014. These numbers will almost certainly decline in coming months, not because of a decline in volume, but from the current major downturn in prices.
The latest prices from our industry sources in China indicate that local farm gate prices for milk are still exceptionally high. Average quality milk is being purchased by processors for about 4.3 RMB per litre. That equates to over $NZ 13 per kg milksolids. Good quality milk is close to $NZ16 per kg milksolds. Continue reading
This is the third of a series of six papers written for the journal ‘Primary Industry Management’. This one was published in June 2013.
For this paper we had three authors: Xiaomeng (Sharon) Lucock, Malcolm Cone and myself. The work was led by Sharon and formed the first part of her PhD studies. It is based on case study work undertaken with New Zealand firms operating in China.
The focus of the work has been on cultural differences and how they affect business practices and relationships. About half the interviews were with Kiwis and undertaken in English. The other half were with Chinese and mainly undertaken in the Chinese language. Continue reading
This is the second of the “China series’ that Xiaomeng (Sharon) Lucock and I wrote for the journal ‘Primary Industry Management’. It was written in December 2012 and published in March 2013.
As with everything relating to China, the statistics do not stand still. In the year ending December 2012, 13% of New Zealand’s sheep meat exports income came from China. Move forward six months, and in the 12 months ending June 2013 this had risen to 21%. Then in the 12 months to June 2014 it rose again to 30%. On a monthly basis, the latest statistics for March 2014 show the China component of New Zealand’s sheep meat trade was 31% by value and 44% by volume. Continue reading