31 Aug 2012

NZ milk production growth predicted to slow

5:38 am on 31 August 2012

A new report from agribusiness banking specialist Rabobank predicts New Zealand's surging milk production will ease off over the next decade.

The milk supply has grown by almost 50% over the past decade, putting New Zealand alongside the European Union as the biggest dairy exporter.

The report's author, Rabobank senior analyst Hayley Moynihan, says production will keeping growing over the next decade, but at a much slower pace.

She says the days of more than 300 new farm conversions in a single season are over.

Ms Moynihan says milk production has grown by around 5% per annum on a compound annual basis over the last two decades.

This is due more to increased herd numbers than higher production per cow, though this has been happening at the same time.

"My view is that that production rate will more than halve in terms of the actual growth rate so it will fall to below 2% on a compound annual basis.

"The much bigger driver within that (will be) more production per cow, rather than substantially more cows".

Ms Moynihan says there will be less prime land available for dairy conversion. Environmental constraints and higher costs will also slow down the rate of growth.