June 16, 2020


New Zealand very dependent on animal feed sourced from other countries



New Zealand's agriculture sector's dependence on animal feed from other countries has become more apparent in recent times as the COVID-19 pandemic and drought struck the country.


According to the Ministry of Primary Industries (MPI), animal feed from outside New Zealand is needed to supplement its grass-fed system.


Currently, the country brings in an average of 2.9 million tonnes of feed a year, with a value of about $734 million. More than 81% of that is sourced from only three countries -- Indonesia, Malaysia and Australia -- with another 10% coming from Argentina and 6% from the United States.


In its latest update, MPI's economic unit said demand for palm kernel expeller (PKE), used primarily as high-protein feed for dairy cows, had pushed spot prices jump up almost a third to $380 a tonne during March, reflecting not only high demand from New Zealand but also the stoppage in plantation and mill activities in Indonesia and Malaysia.


MPI said while the PKE pricing had since returned to normal, New Zealand's "susceptibility to the PKE spot price jump highlights the potential impact of single market dependency, especially for inputs the agricultural industry relies on and have limited affordable substitutes for."


Taking up 68% of the country's overall feed imports by volume, PKE is New Zealand's biggest animal feed import. The Kiwi industry also sources from Argentina which provides 98% of soy derivatives, New Zealand's second biggest animal feed category. 98% of Australia's wheat was bought by its closest neighbour.


Given the "limited market dependency for a number of other key agricultural imports," New Zealand's agriculture sector is vulnerable to "future crises" due to its "susceptibility to shortages and price volatility," MPI said in its report.


- NZ Herald