Among the key factors were ideal climate and soils, a long, strong history, a large skill pool and a high share in key markets and products.
The dairy industry report was one of six food and beverage investor guides produced by Coriolis, under contract to the Ministry of Business, Innovation and Employment, NZ Trade and Enterprise and the Ministry for Primary Industries.
The reports were commissioned to provide insight, attract investment and capital, co-ordinate Government efforts and identify areas for innovation and research and development.
Coriolis said NZ had grown milk production by an average 3.6% annually for the past 33 years, over which time dairy cow numbers rose from two million to 5m.
In the past eight years milk production in Canterbury, Otago and Southland had grown by 6-8% annually, versus much lower growth rates in other regions.
However, average milk production per cow, at about tonnes tonnes annually, was well behind the United States at 10t and European countries at about 7.5t.
The importance of dairying to the NZ economy was illustrated by the fact that 4.75 tonnes of milk was produced per capita in 2014, versus only 1t in the next-biggest per-head producing countries, Netherlands, Ireland and Denmark.
In 2015 NZ was the largest dairy exporter by value, sending US$9 billion worth of a total global dairy trade of $69b while Germany at $8.8b and the Netherlands $7.2b were second and third.
During the past decade NZ had risen from 10% of global dairy trade to as high as 14.4% in 2014 while the market shares of other big producers, notably Germany, Netherlands and France, had fallen.
NZ had 31% of the world’s casein trade, 24% of butter and 23% of milk powders.
It was the market leader in casein at US$1b, butter at $1.6b and exported dairy powders worth $5b.
Coriolis said Fonterra’s competitors grew at 17% compounded annual growth rate during the decade from 2006 (pre-Open Country Dairy and pre-Synlait) to 2016.
Fonterra’s share of raw milk intake fell from 95% to 84% while its turnover in FY2016 was NZ$17b, followed by Open Country Dairy’s estimated $750m, Westland’s $588m and Synlait’s $547m.
NZ had a fast growing and rapidly emerging second tier of domestic and export processors and exporters.
Coriolis cited A2 Milk, Lewis Road Creamery, Milk NZ, Epicurean Dairy (The Collective), Blue River and Spring Sheep, Dairyworks NZ, Envictus Dairies and Dairy Goat Co-operative.
Full and partial foreign ownership accounted for about 8% of NZ industry turnover, it was estimated.
Among the significant foreign investors were Danone, Yashily, Yilli, Wilmar, Friesland Campina, Kirin, Bright Foods, Vinamilk, Pengxin/Dakang, and the China Animal Husbandry Group (CAHG).
Two greenfields proposals were the Mataura Valley Milk plant in Southland (CAHG) and the Happy Valley plant at Otorohanga, Waikato (Asian investors), both about $200m each.
