The global giant in milk trade is not India or no 2 United States or not even any of the other biggest producer, it is New Zealand which alone produce some 18,000 tonnes of milk[i]. Every third minute a container of dairy products is shipped from New Zealand[ii]. Globally, most milk is sold in the country of production, but of the milk production in New Zealand most (95%) is exported. With annual exports in excess of NZ$13.7 billion, the dairy industry is New Zealand’s biggest export earner, accounting for more than 29% by value of the country’s merchandise exports[iii].
|From the Globaldairy|
In New Zealand itself one actor is totally dominating, the farmers’ cooperative, Fonterra, which collects around 90 per cent of New Zealand's milk production. “Because Fonterra purchases such a large proportion of New Zealand's total milk, there isn't a 'market price' for milk that is independent of the price paid by Fonterra”, I read on their web site[iv].
New Zealand accounts for about one-third of global cross-border trade in dairy products, but only account for a little over 2% of total world milk production[v]. This means that the so called world market price is determined at the fortnightly auctions of Fonterra, one single actor.
Considering that only seven percent of the dairy products produced are actually sold outside of the country of production and that the volume traded by Fonterra is in the range of two percent of the global production it is a remarkable achievement – or a scary expression of globalization – that dairy farmers all over the world will sleeplessly await the results of Fonterras auctions.
[i] FAOstat 2009-2011, accessed 23 December 2013
[ii] Fonterra 2013, www.fonterra.com
[iii] DCANZ 2013, http://www.dcanz.com/about-nz-dairy-industry/dairying-today, accessed 28 December 2013
[iv] Fonterra 2014, http://www.fonterra.com/global/en/Financial/Farmgate+Milk+Price accessed 5 January 2014
[v] Ministry of Primary Industries New Zealand, http://www.mpi.govt.nz/agriculture/pastoral/dairy.aspx, accessed 28 December 2013.