Asian investment in New Zealand’s dairy sector to grow

milk-nzChina’s dairy sector was valued at US$40.6bn in 2013. (Image source: desing123/sxc.hu)A new report has predicted that the flurry of Asian investment in New Zealand’s dairy industry will continue

The report, from the food and agribusiness banking specialist Rabobank, looked at the lure of dairy investment in New Zealand and Australia.

Rabobank’s director of dairy research New Zealand and Asia Hayley Moynihan said that international investment was being driven by a demand to secure access to a high quality and safe milk source.

“The surge of Chinese companies in particular, but also others in Asia is likely to continue because regulations are driving more vertically integrated or more control in raw material supplies and that means there is a flurry at the moment to ensure that players aren’t left with few options in terms of who is available to do deals with,” Moynihan added.

She added that the spike in Chinese and Asian investment seen in the past 12 to 18 months was predicted to continue.

The Rabobank director also noted, “Generally we will see investment across the dairy product spectrum, it does tend to be focused on securing raw materials for infant milk formula at this stage, which is largely powders and ingredients but also investment in liquid milk options such as UHT facilities, but we do sound a word of caution with regard to the capacity that is being built in both those product categories and a potential slowing in the rate of growth that we see in China.

“The recommendation is really not to over-estimate the ongoing growth in import requirements by Chinese companies, but we do see that the rate of spectacular growth we’ve seen in recent years is likely to slow as the market matures.”

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