Competitive future for unbroken NZ dairy
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Competitive future for unbroken NZ dairy visiting global expert

New Zealand dairy is well placed to compete in the global market as prices begin to recover in the coming 12 months, a visiting global dairy specialist has told local producers.

Tim Hunt, New York-based global dairy strategist with international agribusiness banking specialist Rabobank, says while current market conditions are “extremely tough” for many local producers, the New Zealand dairy sector is “unbroken” and has the fundamentals in place to enjoy a strong, competitive future in the global dairy trade.

In New Zealand for a series of presentations to Rabobank clients and industry stakeholders, Mr Hunt said the current cyclical price downturn had been made worse by a number of additional shocks – including the dramatic reduction of Chinese buying, the Russian trade ban and the removal of EU quotas – leading to the recent dairy market price crash. But the factors were in place to lead to a sustained price recovery, likely to begin in mid-2016.

“We are in the midst of a nasty downturn. But this is what it is – a very bad cycle, not a shift in the medium-term fundamentals,” he said.

“In the medium-term – looking out from the second half of next year – we continue to expect trade growth and profitable pricing in the dairy sector.”

And once that occurs, the expectation is New Zealand trade will again expand, with the local dairy sector well positioned to compete on global export markets.

“New Zealand dairy farmers are well placed to continue to compete well in international export markets – they are cost competitive, the New Zealand supply chain is low cost and effective and New Zealand has leading market access,” Mr Hunt said.

Speaking to local producers, he said while the current downturn was extremely painful for the dairy sector – particularly in New Zealand where prices had been hit far harder than those in other major dairy export markets – the “medium-term story” for dairy remained a positive one.

“In the next five years, the world economy is still widely expected to grow,” he said. “And there is ample headroom for dairy consumption growth in emerging markets, which a period of lower prices will help to fuel,” he said.

In addition, Mr Hunt said, these emerging markets – including China and South-East Asian countries – were still high-cost producers of their own domestic dairy, making imports more competitive.

Mr Hunt said Rabobank’s forecast was for international dairy trade to expand at a compound annual growth rate of 3.3 per cent, over the medium-term (next five years).

Rabobank New Zealand is a part of the international Rabobank Group, the world's leading specialist in food and agribusiness banking. Rabobank has more than 115 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of approximately 8.8 million clients worldwide through a network of more than 1000 offices and branches. Rabobank New Zealand is one of New Zealand's leading rural lenders and a significant provider of business and corporate banking and financial services to country's food and agribusiness sector. The bank has 33 branches throughout New Zealand. Rabobank also operates RaboDirect, New Zealand’s first internet-only bank specialising in savings and deposits.

Media contacts:

Denise Shaw 
Head of Media Relations 
Rabobank Australia & New Zealand 
Phone: +61 2 8115 2744 or +61 439 603 525 
Email: denise.shaw@rabobank.com 

David Johnston
Marketing Manager
Rabobank New Zealand
Phone: + 04 819 2711 or 027 477 8153
Email: david.johnston@rabobank.com