January 9, 2008

Price hikes inevitable for New Zealand dairy products

New Zealand's national statistics office released reports yesterday indicating that the country's image as a low-cost dairy supplier is under threat, due to rising global demand.

The Statistics New Zealand said that dairy products still dominate New Zealand exports in terms of value, with the price for milk powder, butter and cheeses rising by just under fifty percent for the twelve months ending November 2007.

New Zealand, one of the world's major suppliers of dairy ingredients and low cost products, is finding it difficult to maintain current price range as processors battle over the rapid cost hikes of raw materials like milk.

The total value of exports rose by 18.4 percent to a record NZD3.9 billion (US$2.9 billion) from November 2006 to November 2007, with dairy and petrol accounting for 90 percent of the increase, according to the statistics office.

Reports indicate that whole milk powder accounted for more than half of the value increase, during the twelve-month period.

The USDA issued warnings on the impending price hikes for New Zealand exports, which was confirmed by the industry.

National cooperative group Fonterra, which produces 95 percent of the total dairy output in the country, said it was paying 43.5 percent more to its farmers last year.

Generally, the growth in exports is seen to be beneficial to the overall economy of the country.