Future scenarios for the New Zealand Dairy Industry (2025-2030)

Abstract

The dairy industry is important to the New Zealand economy. New Zealand (NZ) accounts for 2%-3% of global milk production yet is the largest trader of milk across borders. In contrast to other milk producing countries, less than 5% of NZ milk is consumed within the country so producers must be constantly aware of changing global forces with respect to supply of, and demand for, their products. At the core of the NZ dairy industry are the robust pasture based farm systems that have ensured NZ dairy has remained competitive at the global level by being a low cost producer of high quality milk. Operating in a free market environment with minimal government support, these farm systems are vulnerable to global changes and must adapt to continue to be competitive. From a research perspective, this requires a disciplined identification and description of possible plausible futures, followed by a rigorous farm systems design and modelling exercise for each of the identified futures. This study addressed the first aspect of the research endeavour by involving a multitude of stakeholders and using scenario planning as a tool to arrive at four possible plausible future scenarios for dairy in NZ. These scenarios were - 1) Base Case – increased complexity, competition and volatility, 2) Consumer is King – the volume to value revolution, 3) Governments Dictate - political chaos and shrinking markets and 4) Regulation Rules – it is our “privilege to serve”. It was demonstrated that by using the approach to scenario planning taken in this study, it is possible to arrive at a robust description of plausible futures which can provide a landscape for the design of future farm systems, while at the same time facilitating the understanding and recognition of factors that might shape the future of agribusiness and providing a rich source of material that can be used to inform and possibly frame and test strategy and policy.