Cheap feed imports put pressure on New Zealand’s grain sector

New Zealand grain producers are facing growing competition from imported animal feed, particularly palm kernel expeller (PKE), which is widely used in the dairy sector. The country imports more than 2 mln tons of PKE annually, mainly from Indonesia and Malaysia, making it one of the world’s largest buyers.

Price remains the main advantage of imported feed. According to one local farmer, PKE costs around $300/t compared with approximately $500/t for locally produced grain. This price gap makes it difficult for domestic grain growers to compete for demand from livestock farmers. Seed and Grain New Zealand estimates that the country imports around $2 bln worth of animal feed.

Demand for PKE could increase further if dry weather reduces pasture availability. The product is commonly used as supplementary feed for dairy cattle, particularly when pasture is scarce. At the same time, higher shipping costs are making imports more expensive, potentially narrowing PKE’s price advantage over local grain.

Against this backdrop, some livestock farmers may consider increasing their own corn production for feed. New Zealand’s grain sector is also seeking to strengthen its position in the domestic market by promoting the use of locally grown grain in livestock production.

Despite substantial import volumes, PKE accounts for a relatively small share of the country’s dairy cattle diet. According to Fonterra, around 96% of its suppliers’ cows’ diet is grass-based, including other pasture feeds, while PKE accounts for less than 2% on average.

Tags: imports, New Zealand, animal feed, grain