NEW ZEALAND – New Zealand’s milk production is forecast to drop 0.5% in 2022 as the industry returns to more normal production trends after the exceptional production season of 2021, USDA has reported.  

According to recent USDA projections, about 22.25 million metric tons (MMT) of milk will be produced in the 2022 production cycle, assuming normal weather patterns prevail. 

Propelled by a stellar first half of the year, milk production for 2021 is now estimated at 22.37 MMT, 1.8 percent above 2020.  

USDA notes that the volume may have even been higher except cooler and overcast weather during the spring (August/September) impacted pasture growth, reducing potential production in the second half of the year. 

Moving into 2022, USDA expects normal weather conditions to lead to considerably less pasture for farmers which will, in turn, affect dairy production.  

2022’s production is however expected to be in line with the upward milk production trend of about 0.4% per year that New Zealand has been experiencing since 2014. 

 The recent high milk price is expected to remain strong for a second year running in 2022, with the largest processor forecasting prices at US$5.38 to US$5.52/kg milk solids. 

Another trend that is expected to continue into 2022 is the gradual decline in cow numbers as farmers adjust to the new freshwater environmental protection regulations and the looming climate change regulations. 

 Cow numbers reduced slightly by 25,000 head going into the 2021 spring in line with this trend, providing farmers with legroom to feed the remaining cows better and negate potential production losses. 

USDA however cautions that the current government regulations in response to the Covid-19 pandemic may lead to staff shortages that may affect the milk supply in 2022. 

While most products are expected to see a production decline in 2022 due to less milk production, skim milk powder (SMP) production is likely to regain ground in 2022, with production forecast at 365,000 MT (up 11 percent) and exports at 351,000 MT (up six percent). 

On the export side, shipping delays and logistical problems, which have come to dominate nearly all international trade over the last 12 months, are expected to continue to affect New Zealand dairy exports as well. 

USDA however reports that dairy sector exporters in New Zealand have managed to shrink delays from previously lasting weeks to now being only about four to five days during the fourth quarter of 2021. 

China which has upped its imports of New Zealand dairy by up to 45% in the first 8 months of 2021 is expected to continue to dominate trade in dairy products for New Zealand moving into 2022. 

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