Corporate dairy farmer Southern Pastures has signed a three-year $50 million sustainability-linked farm loan with BNZ.
The NZ provenance story is incredibly important for dairy exporters as they cash in on growing demand for clean and green milk products.
Bailey, who recently joined Southern Pastures as its new senior vice president and general manager post farmgate operations, told Dairy News that the premium food trend isn’t going away.
“People are willing to pay extra for better quality, more interesting food from trusted brands with an authentic and traceable story,” he says.
“The general NZ story around food is spot on with the clean, green, sustainable attributes, which consumers want.
“This is particularly so for dairy with studies confirming New Zealand dairy has the smallest carbon footprint globally.”
Bailey says a company like Southern Pastures is able to command the highest prices offshore by taking the New Zealand provenance story even further with its comprehensive 10 Star Certified Values programme.
“Having a transparent and rigorous audited process like this is where the opportunity lies.
“We’re seeing consumers really focus on environmental impact of food production and expect they will eventually want to measure the carbon footprint of their products. This is where individual brands within the New Zealand provenance story can really begin to stand out.”
Bailey, who was a RaboResearch senior dairy analyst based in the US before taking up his new role, says Covid has emphasised health and wellness from many angles. “Dairy demand has come roaring back as people seek natural nutrition and go back to basics; simple, uncomplicated, familiar and trusted food,” he says.
There are specific examples of this on a national scale. In the US, the Federal Government has bought massive amounts of dairy as part of its food support programs.
Chinese demand has also been very strong.
Bailey says the Chinese Government has emphasised the health benefits of milk and there are reports that fluid milk demand is pumping.
“As a result, the Chinese dairy processors do not have excess milk to dry (which they normally would) because fluid demand has been so strong,” he says.
“This has helped bolster NZ exports, as we can meet growing demand and also backfill where domestic Chinese manufacturers are missing.
“Furthermore, NZ ingredients remain at a substantial premium relative to the global markets due to many factors: grass-fed is better, many brands require Fonterra specifications for label requirements, and NZ has a great working relationship with key importing markets such as China.”
Bailey believes dairy’s outlook is solid at this stage, “which is somewhat tough to fathom as we are genuinely in the midst of a global catastrophe, high unemployment rates (6.7% in the US vs. 3-4% pre-Covid), relentless pandemic, restaurants remain closed etc”.
“But global commodities remain strong, from oil to grains, and dairy is riding the wave with them.”