NEW ZEALAND BUTTER New Zealand’s dairy sector is the country’s largest exporter, with butter shipped to more than 80 different markets. While the industry was hit by COVID-19, export sales have returned close to prepandemic levels, with positive growth ahead Barbara Barkhausen New Zealand’s butter industry is thriving, despite the disruption of COVID-19 and Russia’s invasion of Ukraine, with strong export demand, particularly from China, but also from other markets worldwide, especially in the ASEAN (Association of Southeast Asian Nations) bloc. Major exporter Fonterra is also looking ahead to a world that increasingly cracks down on carbon emissions, introducing the first carbon-zero certified organic butter made in New Zealand, reflecting how consumers are seeking more sustainability in their food purchases. The past five years have seen the butter manufacturing industry in New Zealand performing strongly. The industry relies heavily on export markets – unsurprising given its domestic market comprises just 5M people. Overseas sales have boosted industry performance from 2017 to 2022. According to a report from research company Ibis World, ‘Cheese, Butter and Milk Powder Manufacturing in New Zealand’, the country’s dairy industry generated revenues of NZ$22bn (US$15bn) in 2020-21 from exports and domestic sales of all products, while its revenue is expected to increase by 5.6% in 2021-22 as recovering economic conditions globally increase world dairy prices. “Demand for industry products is projected to increase in export markets such as China over the next five years,” Ibis World says in its recent New Zealand dairy update, released in March 2022. “Products from New Zealand have a high-quality reputation, which is likely to become a key selling point to increasingly health-conscious consumers.” According to dairy industry organisation the Dairy Companies Association of New Zealand (DCANZ), New Zealand butter was exported to more than 80 different markets in 2021. “Overall, the dairy industry is New Zealand’s largest 28 OFI – MAY 2022
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Strong export de exporter, accounting for around a third of all export revenues,” says executive director Kimberly Crewther.
COVID-19 impact
Like many other industries, New Zealand’s butter export industry felt the impact of the COVID-19 pandemic. According to S&P Global’s Global Trade Atlas, the value of New Zealand’s total butter exports decreased from US$1.3bn in 2019 to US$1bn in 2020. However, in 2021, exports returned close to prepandemic levels and the value of New Zealand’s butter exports increased to US$1.2bn, a 15.5% increase on 2020. During the pandemic, New Zealand’s butter exporters struggled like the rest of the world, with global supply chain issues caused by a range of problems including port closures, container shortages and travel restrictions, says a statement from New Zealand dairy major Fonterra, a dairy co-operative owned by about 10,000 farming families. The cost of shipping and freight has also increased since the start of the pandemic. The country’s relative geographic isolation did not help. The Fonterra
statement stresses that in 2021, shipping companies often bypassed New Zealand, with available shipping capacity dropping by 20% and shipping ‘schedule integrity’ (the reliability of maritime shipping schedules) plunging from a long-term average of 80% to below 35% in the year. Exporters also faced temporary port closures and restrictions due to port congestion, as well as a container shortage. However, despite these challenges, Fonterra shipped a total of 2.59M tonnes of dairy products, including butter, for the year ending 31 July 2021, an increase of more than 4% year-onyear. According to Statista, a German company specialising in market and consumer data, New Zealand produced around 470,000 tonnes of butter in 2021, a major export commodity. Apart from Fonterra, there are other leading players in the butter market in New Zealand, such as Whitestone Cheese and Lewis Road Creamery, both of which manufacture butter. Although New Zealand also exports its dairy products to countries like Australia, Indonesia, Japan, Malaysia, the www.ofimagazine.com
03/05/2022 13:59:56
