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Dairy exports into Southeast Asia set to boom over next decade – Rabobank report

Dairy exports into the Southeast Asian market are set to surge over the next decade creating future opportunities for dairy companies in New Zealand and other key dairy exporting regions, according to a new report by agricultural banking specialist Rabobank.

In the report, Dairy Export Boom Beckons in ASEAN-6 – With a Push and a PullRabobank says the combined annual milk deficit of the ASEAN-6 – Indonesia, Malaysia, The Philippines, Singapore, Thailand and Vietnam – is expected to grow to 19 billion litres in 2030, up from an estimated 12.9 billion litres in 2020.

RaboResearch senior dairy analyst Michael Harvey said a growing milk deficit in Southeast Asia was likely to be a major pull factor for dairy exporters looking for strategic dairy export growth.

“The large populations, combined with increasing urbanisation, a growing middle class with purchasing power and continued development of integrated supply chains will all support dairy consumption growth across the region,” he said.

“Per capita dairy consumption rates in the ASEAN-6 are also currently low in comparison to other advanced Asian economies providing significant headroom for growth.”

Furthermore, the report says dairy companies will be ‘pushed’ towards dairy export opportunities into ASEAN-6 countries by rising geopolitical tensions and receding demand tailwinds in China.

“Coming into 2020, China’s trade relations with key trading partners were already on shaky ground – particularly so for Australia and the US. And while dairy trade has largely been immune so far, there has been a notable deterioration in trade relations, which has the potential to reverberate far and wide.” Mr Harvey said.

“Slowing Chinese dairy demand is a further factor which will prompt dairy exporters to look at markets outside China, with this expected to ease over the next decade as the rate of growth in per capita income slows.”

Mr Harvey said these factors would likely compel dairy exporters to reassess their export growth strategies and consider increased investment in the ASEAN-6 region.

“This is particularly relevant for New Zealand dairy companies who are more trade-exposed versus their peers and, consequently, have the highest level of market concentration risk.” he said. 

Michael Harvey, Rabobank New Zealand

Rabobank Senior Data Analyst Michael Harvey

 “With over 35 per cent of New Zealand dairy trade bound for China and less than 20 per cent heading to Southeast Asia, now is a good time for New Zealand dairy companies to evaluate their portfolios to determine if they are overweight in China and/or underweight in Southeast Asia.”

Critical battleground

The report says Southeast Asian dairy markets have long been a critical battleground for dairy exporters.

“Oceania exporters have a slight competitive edge in the region because of tariff advantages provided by a cocktail of bilateral trade agreements and the ASEAN-AustraliaNew Zealand Free Trade Agreement (AANZFTA),” Mr Harvey said.

“However, with many global peers seeking their own free trade agreements with the ASEAN economies, the market is expected to become mostly harmonised with respect to tariffs and non-tariff barriers over time.”

Mr Harvey said market competition is expected to intensify due to a combination of factors.

“There are also several established global dairy companies operating in Southeast Asian markets which continue to double down with investment. This includes the world’s largest dairy company – Nestle – which has identified these markets as key for potential growth, as illustrated by several recent investments,” he said.

“In addition, dairy companies in the northern hemisphere and China are broadening their scope and looking to further establish themselves in the region.”

Key considerations

The report says there a number of factors for dairy companies to consider as they aim to strengthen their position in ASEAN-6 dairy markets.

“One of the key considerations for dairy exporters and their supply chains looking for growth in Southeast Asia, is how they can best extract premiums and capture more value,” Mr Harvey said.

“Right now, exporters’ ability to commercialise and/or generate added value in the region with sustainability initiatives remains limited as many consumers in the region are pricesensitive. Nonetheless, over the next decade we do expect to see an increased focus by multi-national food and beverage companies operating in these markets to tackle more sustainability issues across dairy supply chains.”

With Southeast Asian dairy trade flows expected to remain heavily skewed towards milk powders, the report says, a further consideration for dairy companies is how to manage milk solids.

“A push into these markets naturally provides a home for protein, but will leave dairy companies with the task of marketing the butter fat components, as the demand for skim milk powder (SMP) is more than double that of whole milk powder (WMP),” Mr Harvey said.


Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has nearly 120 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 about 8.6 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 branches throughout New Zealand.


Media contacts:

David Johnston
Marketing & Media Relations Manager
Rabobank New Zealand
Phone: 04 819 2711 or 027 477 8153

Denise Shaw
Head of Media Relations 
Rabobank Australia & New Zealand 
Phone: +612 8115 2744 or +61 2 439 603 525