The government plans to review the dairy quota allocation system so New Zealand’s dairy industry can maximise its export returns.

Agriculture minister Damien O’Connor said it was timely and prudent for the government to take a “fresh look” at how it allocated dairy export quotas because NZ’s free trade agreements (FTAs) with the United Kingdom and European Union presented new opportunities for NZ exporters.

“I want to ensure the quota system is working well for everyone, that the value of quota is being maximised, and that opportunity is not being missed,” he said in a statement.

The Ministry for Primary Industries sets the dairy export quota allocations each year, which it then allocates to eligible processors proportional to the milk they collect from farmers. 

To be eligible, processors have to collect at least 0.1% of NZ’s total milk solids.

A number of dairy export markets are also controlled through tariff quotas, which provide access into a market for set volumes at a lower or zero tariff.

O’Connor said the government had “fought hard” for NZ’s dairy exporters and the dairy industry was looking to take up the benefits under new FTAs as soon as possible.

The government expects to consult on the review of the dairy export quota allocation system in late 2022, with any legislative change started after the consultation. 

The review will cover all dairy export quotas that are allocated by NZ under the Dairy Industry Restructuring Act, not just new quotas under the UK-NZ and NZ-EU free trade agreements.

The dairy quotas available under the UK-NZ agreement will at first be allocated under the current quota allocation mechanism outlined in the Dairy Industry Restructuring Act.

O’Connor said in his statement that the UK and NZ were now completing processes for the UK-NZ free trade agreement to be ratified, which meant NZ and the EU could sign the NZ-EU agreement in 2023, with entry possibly in force as early as 2024.

“The recent FTAs are going to provide new opportunities for our exporters to grow export revenue even more, boosting NZ’s economic security as we recover from covid-19,” he said.

“The dairy sector continues to be a mainstay for NZ with dairy export revenue reaching a record $22.1 billion in the year to June 2022.”