4 Mar 2015

Asian investment in dairy predicted to grow

2:35 pm on 4 March 2015

A new report predicts the flurry of Asian investment in the New Zealand dairy industry is likely to continue.

The report, which comes from the food and agribusiness banking specialist, Rabobank, looked at the lure of dairy investment in New Zealand and Australia.

Rabobank's director of dairy research New Zealand and Asia Hayley Moynihan said international investment was being driven by a demand to secure access to a high quality and safe milk source.

She said the spike in Chinese and Asian investment seen in the past 12 to 18 months was predicted to continue.

"The surge of Chinese companies in particular, but also others in Asia is likely to continue because regulations are driving more vertically integrated or more control in raw material supplies and that means there is a flurry at the moment to ensure that players aren't left with few options in terms of who's available to do deals with," she said.

"Generally we'll see investment across the dairy product spectrum, it does tend to be focused on securing raw materials for infant milk formula at this stage, which is largely powders and ingredients but also investment in liquid milk options such as UHT facilities, but we do sound a word of caution with regard to the capacity that is being built in both those product categories and a potential slowing in the rate of growth that we see in China.

"The recommendation is really not to over estimate the on-going growth in import requirements by Chinese companies, we do see that the rate of spectacular growth we've seen in recent years is likely to slow as the market matures. It's not that there aren't opportunities there, but just to recognise that a maturing market will see slower average growth."

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