March 22, 2016
New Zealand PM hopeful of dairy price recovery due to Asian demand
Dairy prices have fell below production costs but could recover in light of population growth coupled with increased demand in Asia, said John Key, the Prime Minister of New Zealand.
This year, prices for dairy products endured five disappointing auctions at the GlobalDairyTrade platform.
Elsewhere in the world, the EU could support production despite the global oversupply. Trade continues to be hampered by Russian import bans and less-than-favourable demand from China as the mainland's inventories swell.
As a result, dairy farmers are witnessing an adverse impact on incomes, dairy debt levels and expenditure in rural communities.
"I understand dairy is weak at the moment," Key commented, explaining that the factors for lower prices are "temporary". He believes that rising income in Asia will prompt consumeristic desires for protein and expected an "enormous" demand that is "not going to change".
In addition, Key expressed confidence that agriculture will remain the crucial component of the Kiwi economy, even as it diversified with tourism having overtaken dairy as the country's largest export earner.
The government is also working to eliminate blockages which kept agricultural producers from delivering their products to international markets.
In the meantime, New Zealand's officials will be heading to China for a renegotiation of a free-trade agreement (FTA) between both countries. The original FTA, formalised in 1998, leads to an increase in New Zealand's commodity exports including milk powder and meat.
"(The agreement) works very well for us… we have outperformed it so well that we want to get even better access," Key remarked.
In the latest talks, New Zealand will seek an end to special safeguards on its agricultural exports to China. The rulings do not apply to Australian exports under the year-old Australia-China FTA.
Key also mentioned of New Zealand's interest in obtaining access for the country's chilled products. It exported $1.21 billion of meat to China last year. However, current restrictions permit only frozen products to be shipped.
The Meat Industry Association stated that access for chilled meat exports would open up an "enormous" potential market for the country's $6.83 billion meat export industry.
Another market which New Zealand intends to reach out to is India. Key claims that the country lacks the capability to achieve food self-sufficiency as chances for that development is "absolutely zero".