New Zealand companies missing out on added dairy value in SE Asia: report

Growing consumer demand for dairy products in Southeast Asia is offering untapped export opportunities for the New Zealand dairy industry, according to a government-commissioned report out Wednesday.

The report said six of the Association of South East Asian Nations (ASEAN) nations held opportunities for market-ready New Zealand products including drinking milk products, yoghurt, condensed and evaporated milk, cheese, butter, ice-cream and infant formula.

The report warned that the vast majority of the final value of New Zealand dairy ingredients was being captured by non-New Zealand firms in Southeast Asia.

It cited the retail shelf price of a carton of UHT (ultra-heat treated) milk at 1.73 NZ dollars (1.14 U.S. dollars), of which just 13 NZ cents (9 U.S. cents) went to the New Zealand dairy processor and 18 NZ cents (12 U.S. cents) went to the farmer.

New Zealand was this year commemorating 40 years of ties with ASEAN, which was its fourth largest trading partner, Economic Development Minister Steven Joyce said in a statement on the launch of the report.

"In the past five years, New Zealand's trade with ASEAN has grown at a rate second only to China. New Zealand is the largest supplier of milk powder to Southeast Asia and boasts a strong import share across most major dairy products," said Joyce.

New Zealand had free trade agreements with ASEAN as a group and with Singapore, Thailand and Malaysia separately.

Dairy companies had made significant investments in the manufacture of products such as infant formula and UHT milk, Primary Industries Minister Nathan Guy said in the statement.

"We are also seeing the emergence of a number of niche players with a focus on the premium end of the market."

The six nations -- Thailand, Malaysia, Singapore, Indonesia, the Philippines and Vietnam -- with a total population of 583 million, were an attractive market for consumer-ready dairy exporters. Endi