A new report says New Zealand dairy exporters are facing stiffer competition in China from foreign producers, but the burgeoning appetite among Chinese consumers for dairy products means New Zealand exports will keep growing.
NZX Agrifax dairy analyst Susan Kilsby, who wrote the report after travelling to China, says the Asian powerhouse has increased its imports of whole milk powder exponentially since the melamine crisis in 2008.
New Zealand last year had close to 90% of the whole milk powder market.
Ms Kilsby says strong demand is attracting competition from European and Latin American producers. Denmark, France, Argentina and Chile have all stepped up whole milk powder sales to China in the first half of this year.
However New Zealand has retained its massive market share, she says. It has developed relationships and supply chains in China and other countries will take time to move into that market.
Ms Kilsby says China is increasing its own production although consumers remain wary of local milk.
The report predicts the current strong demand for infant formula will last at least till 2020.
But the effects of China's one-child policy will begin to be felt after that time, reducing the rate at which children are being born.
China is also New Zealand's largest log market, and NZX Agrifax market analyst Nick Handley says prices there are starting to stabilise after taking a dive last month.
