New Zealand, renowned as the world’s leading dairy exporter, is grappling with a domestic butter price surge of 65% over the past year, elevating the average cost of a 500g block to NZD $7.42. This escalation is attributed to global supply constraints and robust international demand, particularly from Asia and the Middle East, which have tightened milk supplies in key producing regions like Australia. Consequently, domestic consumers are facing the repercussions of a market heavily influenced by export dynamics, with 95% of the nation’s dairy products destined for overseas markets.
The soaring prices have led to unconventional consumer responses: individuals are undertaking extensive drives to procure more affordable butter, importing it from Australia, or resorting to churning their own. Notably, a school in Canterbury capitalized on the situation by selling 19,000 blocks of butter as a fundraising initiative. Bakeries, such as Kayes Bakery, are importing butter to mitigate costs, highlighting the strain on small businesses.
Despite the domestic challenges, the dairy sector contributes approximately NZD $11.3 billion annually to New Zealand’s economy, underscoring the tension between export-driven profitability and local affordability.
Industry Insight:
The current scenario underscores the delicate balance between maximizing export revenues and ensuring domestic market stability. For dairy stakeholders, this situation presents an opportunity to reassess supply chain strategies and explore mechanisms that can buffer local markets from global price volatilities.
Source : Dairynews7x7 June 7th 2025 Read full story here