Data reveals slump in China’s dairy demand

New data highlights the struggle New Zealand exporters have faced because of China’s slow economic growth this year.

Overseas merchandise trade statistics for the September quarter showed goods exports fell $1.4 billion (8 per cent), following a 3.7 per cent rise in the June 2023 quarter.

Goods imports fell $697 million (3.4 per cent), following a 7.5 per cent fall in the June 2023 quarter. The quarterly trade balance was a deficit of $3.5b.

The total value of goods exported to China in the year ended September 2023 was $19.3b, according to the figures released by Stats NZ yesterday.

Annual exports to China have been falling since May 2023, Stats NZ said.

“The biggest letdown for Kiwi exports was the dairy industry,” said economist Shannon Nicoll, at Moody’s Analytics.

A 31 per cent year-on-year drop in value took dairy exports down to $459m. Milk powder, which accounted for almost half of dairy exports by value, led the way with a 30 per cent tumble, Nicoll said.

This came as the unit price fell 23 per cent and volumes 9.3 per cent. The next two largest dairy exports, milk fats and cheese, also suffered lower unit prices and quantities.

Meat exports were also off, year-on-year. Of the $115m drop in meat exports in the latest numbers, China’s drop in imports accounted for $84m, Nicoll said.

“Unfortunately, there wasn’t any growth on the exports side to counter the blows in agriculture. The largest rise was a $37 million jump in exports of mechanical machinery and equipment.”

New Zealand’s goods trade would face headwinds in the coming months, Nicoll said.

“Slower global demand and continued subdued trade with China could spell trouble for exports. On the opposite side of the equation, consumer-sensitive imports will likely be troubled by a weak domestic economy.”