12 Nov 2013

High input costs in China's milk benefit NZ

7:28 am on 12 November 2013

A dairy industry analyst says it's a good thing for New Zealand farmers that it costs substantially more to produce milk in China than it does to produce the same volume in this country.

The International Farm Comparison Network 2013 Dairy Report shows that producing 100kg of milk in New Zealand costs $US35. In the United States it costs $US44 to produce the same amount and in China it's 50% higher again.

NZX Agrifax's dairy analyst Susan Kilsby says that reinforces China's ongoing dependence on importing dairy products from countries such as New Zealand.

She says it's importing feed that makes producing milk so expensive in China.

The IFCN dairy report says the cheapest cost of production is in Cameroon where it costs $US4 to produce 100 kilos, and the most expensive Japan - at $US128.

But the report also details the spike in milk production costs in New Zealand over the past 12 years.

It shows that in New Zealand in US dollar terms between the year 2000 and 2012, milk production costs almost tripled.

The report attributes this to the increase in prices for labour and land, and the appreciating exchange rate.

Ms Kilsby says the report shows the increased use of concentrated feeds in dairy farming systems and, that there are 122 million dairy farms in the world with an average herd size of just three animals.