New Zealand’s $40 billion primary exports of meat and dairy products is at a crossroads, facing unprecedented challenges and demanding immediate action. As global competitors race ahead with innovative protein technologies, current practices threaten to drag Kiwi primary industries into a "race to the bottom," risking both profitability and international relevance.
Source: © Vitaliy Nazarenko | Dreamstime.com - Solitary Farmer on the land
New Zealand’s agricultural economy has long been powered by cooperative giants like Fonterra, Silver Fern Farms, and Alliance, which together form the backbone of our meat and dairy exports. Dairy alone contributes over $22 billion annually to the economy, while meat exports generate around $10 billion. Yet, these sectors are buckling under the pressure of rising production costs, fluctuating global markets, and outdated operating models- the legacy model is under siege.
Alliance’s continuing losses and the persistent struggles of Silver Fern Farms are warning signs New Zealand's once-prominent position is faltering. Meanwhile, global dairy powerhouse Fonterra faces stiff competition from countries like the United States, Australia and Europe, where new technologies and refined marketing strategies are rapidly reshaping the protein market.
The world’s protein landscape is transforming. Countries like the US, Singapore, Israel, the Netherlands and Australia are doubling down on cultivated meat, precision fermentation, alternative proteins and value-added ready-to-eat (RTE) products. These technologies lower production costs, enhance sustainability, and cater to growing consumer demand for convenience and innovation.
In stark contrast, New Zealand’s focus remains tethered to traditional bulk exports, leaving the country exposed to commodity driven market and diminished returns. The danger is clear: without a shift, New Zealand risks being eclipsed by those nations embracing the future of food.
As of the 2021/22 season, New Zealand had approximately 10,601 dairy herds, with a total of 4.67 million dairy cows. The dairy cattle farming industry employed 39,264 people as of the 2018 census. Sheep numbers. have declined to just over 23-million from highs around 60-million.
To safeguard the livelihoods of farmers and ensure consistent, high-value export returns, the time is ripe for New Zealand to look towards a modernised, tech-driven agricultural model - the processes to achieve this are multifaceted.
Embrace Technology Across Co-op Structures - Farmers' cooperatives could be looking at transformative innovations like cultivated meat and precision fermentation. By diversifying product lines and revenue streams, co-ops can protect farmer incomes while staying competitive. Farmers can be encouraged to grow plant protein crops to augment income from their Coop shareholdings. It's predicted precision fermentation dairy proteins could fetch significantly higher prices in global markets compared to raw milk solids.
Reinvent Legacy Infrastructure for Value-Added Products - Existing processing facilities, including freezing works and dairy factories, need upgrades to produce premium RTE products. Markets in Asia and Europe are particularly hungry for convenience-focused, high-protein offerings. In other words give the market what it is demanding as 4.5 billion people in Asia adapt eating habits to best meet individual needs and budgets. Adapting facilities to produce heat-and-eat meals, protein snacks, and protein-enriched beverages could create new revenue streams while reducing waste.
Leverage New Zealand’s Sustainability Story - Sustainability is a powerful marketing tool. A strategic push to promote New Zealand’s clean, green image alongside cutting-edge innovations can command premium pricing in competitive markets. Here lies an opportunity to reinstate 'Brand New Zealand' in the international market place. According to an industry insider, New Zealand remains 'insignificant' in the global context. Highlighting regenerative farming practices in conjunction with precision-fermented or hybrid protein products could well be the country's saving grace.
Upskill the Industry on Emerging Tech - Many farmers are wary of innovations like cultivated meat and precision fermentation, viewing them as threats rather than opportunities. Targeted education and training programmes would bridge this gap. Workshops co-hosted by Fonterra, Silver Fern Farms, and research institutions could demystify these technologies.
Reinstate Government Support for Agri-Tech R&D - A decline in government funding for science and technology represents a major setback for innovation. Renewed investment is imperative to developing scalable solutions reducing production costs and increasing profitability. The MacDiarmid Institute’s award-winning research highlights the economic potential of science-driven agricultural advances along with the work of Massey Universities Riddet Institute.
Streamline Co-op Operations and Focus on Collaboration - Rationalising smaller cooperatives and fostering partnerships with global players could create efficiencies and open access to new markets. Diversifying partnerships beyond over-reliance on markets like China would reduce vulnerability to geopolitical shocks. Would Alliance forinstance consider a merger with Silver Fern Farms 'once industry differences were put aside', says our industry insider, enabling a 'diversified marketing' approach.
Source: PFN Ai Archives - New Zealand beef farmers at a saleyard.
With $40 billion in primary exports at stake, the time for action has never been better. The longer New Zealand clings to legacy systems, the greater the risk of being relegated to low-margin, bulk commodity markets. This race to the bottom not only threatens farm incomes but also undermines the country’s global standing as an agricultural leader.
New Zealand’s farmers and cooperatives have always been the backbone of the economy, but protecting their future requires bold decisions today. By integrating new technologies, modernising infrastructure, and refining export strategies, the country can secure a prosperous future honouring its agricultural heritage while fully embracing innovation.
As the global protein market evolves, New Zealand faces a choice - lead the way or be left behind. With the right vision, New Zealand can rise above the competition, reclaim its place as a premium protein producer, and safeguard its primary industries for future generations.
To secure its future, New Zealand must honour its past not by clinging to it, but by transforming it into a legacy of innovation and resilience or risk becoming a cautionary tale of a proud agricultural heritage lost to stagnation and missed opportunities.
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