That was the message delivered in the Ministry of Primary Industries (MPI) Situation and Outlook for Primary Industries 2013 report (SONZ). Milk production in the year to May 31, 2014 is forecast to increase to 1740 million kgs milksolids (kgMS). This is a 4.5% increase on the production estimated by MPI for the 2012/13 season, and a 3.3% increase on the stella 2011/12 production season. When compared with data released by Fonterra since the writing of the SONZ it would appear the Ministry has slightly underestimated the impact of the drought on 2012/13 production.
Looking forward the number of dairy cows in milk in the coming season is forecast at 5,090,000 head. This is a 1.6% increase on year ago figures. In each of the following three seasons the national dairy herd is expected to increase by a further 130,000 cows per year. Strong productivity gains are also forecast for the coming seasons. The combination of higher productivity per cow and greater cow numbers delivers a milk production forecast of 1,925 million kgMS in the 2017 season. This equates to a 14% increase in output in the five year period from 2012 to 2017. Over the same time period the value of New Zealand's dairy exports is expected to increase by 30%.
The increase in dairy export values is brought about by a firm international market for dairy products combined with the additional production from New Zealand. "International dairy prices are forecast to increase further in the 2013/14 season, and to continue to trend upwards for the remainder of the outlook period" says the report. Milk powder is forecast to trade at an average annual price between US$3,600 and US$3,900 in the next four years.
