Just how much less milk will New Zealand produce?

Published 6 January 16

Recent predictions suggest a drop in New Zealand milk production in the current season (Jun-15 to May-16) due to the impact of the El Niño and low milk prices. However, there is uncertainty over how large this drop will be.

The decline in NZ milk production is a vital element in the recovery of global dairy markets, especially as NZ exports around 95% of its milk. Monthly milk production figures have shown declines although they have been variable, and forecasts for annual production range from a 3% to 6% decline. This would equate to a drop of between 640m to 1,300m litres of milk.

We do know that NZ has culled more cows this year resulting in a drop of around 300,000 dairy cattle from the previous year. This is the first annual reduction in the herd for ten years. While this represents 6% of the dairy herd, it is unlikely to result in a 6% drop in milk production. Farmers in NZ have been looking to reduce production costs by removing the lower performing cows. Therefore, a 6% reduction in the dairy herd will push milk production down, but not by the full 6%.The uncertainty over just how much less milk there will be seems to hang on the strength of El Niño and its impact on grazing conditions. The El Niño is reported to have its strongest impact in the period between December and February, which typically accounts for around one-third of annual milk production.

New Zealand production figures are published monthly by AHDB Dairy Market Intelligence.

NZ milk production forecasts 06.01.16