Milk production

IBISWorld expects milk production to uptick by 0.9% in 2024-25, reaching 20,718 megalitres. This growth is driven by favourable weather conditions, improved pasture quality and lower feed costs. New Zealand's temperate climate supports cost-effective, high-quality pasture-based systems, enabling dairy farmers to maximise the use of home-grown feed. Dairy is crucial to New Zealand's economy, with the Ministry for Primary Industries estimating dairy exports to reach $25.5 billion in 2024-25. The dairy industry's well-established seasonal calving system, which aligns cattle births with natural pasture growth, ensures consistent nutrition for herds year-round. This approach reduces costs and boosts overall milk productivity.

Local herd genetics and agriculture technology cooperative, Livestock Improvement Corporation (LIC) has noted significant advancements in the productivity on dairy cattle farms across the country. The cows produce approximately 50 kg more milk solids annually compared to a decade ago despite maintaining similar body sizes. These gains are primarily the result of genetic improvements, which account for about 40% of the efficiency increase. The national Fertility Breeding Value (BV) averages 0.7, with 69% of the herd exhibiting positive BV scores—an essential factor for efficient calving. New Zealand's average calving interval of 368-370 days is the shortest globally, enabling the industry to maintain high productivity.

Milk production has fluctuated over the past five years. Production volumes vary from season to season depending on weather conditions, herd sizes and conditions in global dairy markets. Adequate rainfall improves pasture quality, which in turn boosts dairy herd productivity. Conversely, periods of low rainfall or high temperatures increase livestock stress, leading to lower yields. For example, favourable weather conditions and improved pasture quality contributed to solid growth in milk production in 2018-19 and 2020-21, while low rainfall in 2019-20 contributed to a decline. Furthermore, adverse conditions in spring hindered pasture growth, weakening milk production volumes in 2021-22 and 2022-23.

Regarding sustainability, the New Zealand Dairy Cattle Farming industry has made steps to minimise its environmental impact while at the same time attempting to maximise farm profitability. The industry leverages initiatives like LIC's HoofPrint index to select lower-emission bulls, ultimately enhancing cow genetics to reduce nitrogen waste. The average herd life exceeds 4.5 lactations, one of the highest in the world, indicating strong longevity and resilience within the herd. These efforts reflect the industry's adaptability and commitment to continuous improvement, ensuring it remains competitive and environmentally responsible in a rapidly changing landscape.

Milk prices are heavily influenced by conditions in international markets, with domestic prices generally following global dairy prices. Higher domestic prices typically encourage farmers to maintain or increase herd sizes, boosting milk production. Rabobank noted that rising commodity prices and improved margins for farmers in key exporting regions are expected to increase milk production in 2025 as dairy producers benefit from better financial conditions. However ongoing challenges like volatile weather conditions, rising production costs and shifting global demand have constrained farmers' ability to sustain higher output levels. Overall, IBISWorld expects annual milk production to fall at a compound annual rate of 0.4% over the five years through 2024-25.