High logistics costs make New Zealand grain less competitive than imports

High domestic transport costs in New Zealand are intensifying competition between local grain producers and foreign suppliers. According to Hamish Marr, the country’s former special agricultural trade envoy, transporting grain between the South and North Islands across Cook Strait costs $110–130/t. As a result, shipping grain from Australia to New Zealand can sometimes be cheaper than transporting it within the country. Marr made these comments during an agricultural forum at Lincoln University.

The problem of high logistics costs is becoming more acute as New Zealand’s dependence on imported grain and feed products continues to grow. According to Marr, around 60% of the country’s grain and feed requirements are met through imports. In 2025, combined imports of wheat, corn, barley, soybean meal and palm kernel feed products reached 2.9 mln tons, compared with 1.8 mln tons in 2010. Thus, overseas purchases increased by approximately 60% over 15 years.

Meanwhile, domestic grain production in New Zealand has remained largely stagnant. While farmers produced around 900 thsd tons of grain in 2010, output reached only about 1 mln tons in 2025. Due to high transport costs and competition from cheaper imported products, domestic feed grain prices are approaching or even falling below production costs. This is reducing the profitability of local farms and limiting opportunities to expand production.

According to Marr, the situation is further complicated by insufficient transport infrastructure and a lack of support mechanisms for domestic freight. As an example, he pointed to Australia, where the government subsidizes freight transportation between Tasmania and the mainland. However, as a country heavily dependent on international trade, New Zealand cannot rely on extensive restrictions on grain imports. Local producers therefore need to find alternative ways to improve competitiveness, particularly through infrastructure development and the promotion of locally produced grain.

One possible approach, according to the expert, is the NZ Grown Grains certification scheme, which highlights the origin and quality of domestically produced grain. Meanwhile, further expansion of dairy farming could increase demand for feed ingredients and make the country even more dependent on imports. Without improvements in transport infrastructure and production cost structures, local grain growers risk losing further ground to imported products, potentially encouraging a shift away from grain cultivation toward other agricultural activities.

Tags: grain, New Zealand