El Niño Threatens New Zealand Dairy Industry with Higher Breakeven Prices

New Zealand's dairy industry is bracing for the impact of El Niño, which could push breakeven prices above $9 per kilogram of milk solids.

A recent analysis by DairyNZ found that under a strong El Niño event, the national breakeven benchmark would rise to $8.90/kg MS, while a very strong pattern would drive it up to $9.07/kg MS.

The main driver of this cost inflation is pasture degradation, which forces dairy operators into expensive supplementary feeding strategies, such as increased purchases of palm kernel expeller (PKE), commercial grains, and homegrown silage.

Milk production is also projected to decline by 2.1% under a strong event and by roughly 3.3% in a severe scenario due to biological feed deficits depressing per-cow lactation persistence after the seasonal peak.