New Zealand dairy and meat farmers are cashing in on a world hungry for protein as weight-loss drugs drive up demand

Instead, they have stayed quite firm at close to $10 per kg of milksolids.

According to NZX data, New Zealand milk production for the 12 months through to April was up 3.7% (up 4.6% on a milksolids basis).

Mike McIntyre, head of derivatives at Jarden, says high demand for protein globally is helping to underpin prices, despite there being more milk.

“Typically, we would have expected farmgate milk prices to have fallen because there was a lot more milk, and that hasn’t happened,” McIntyre told the Herald.

“That’s been a fantastic outcome for New Zealand farmers and for the wider economy.”

Despite the lift in production, Fonterra has only increased the volume of product it puts on the twice-monthly Global Dairy Trade (GDT) platform once in the season to date.

Historically, higher collections would have resulted in more product being added to GDT, placing downward pressure on prices and ultimately on the milk price that Fonterra pays its farmers.

“We’re seeing like a 5% increase in the amount of milk being collected this season, so we’ll be over two billion KG of milksolids, but we’ve only seen throughout the entire season one increase in volumes added back on to GDT,” McIntyre said.

“Typically, in the past if we’d seen volumes increase like we’ve seen in terms of collections, we would have seen more product added on to the GDT platform.”

Around 2020, New Zealand was producing around 1.6 million tonnes of whole milk powder. Now, the run rate for whole milk powder is more like 1.2 or 1.3 million tonnes.

McIntyre says that means a lot more milk is going into the other applications and protein “is probably the most likely scenario”.

“We’ve seen a recovery in the fat prices – butter has been stronger – and in the protein side of things, we are obviously seeing greater demand.”

That greater demand was showing in the market for cheese and the likes of whey protein concentrate (WPC80) and whey protein isolates (WPIs) as well.

WPC80 is about 80% protein and WPIs 90% protein.

The whey products are favoured, especially by bodybuilders, because they can absorb it very quickly, but it’s now being used in many other applications – infant formula, sports bars, sports drinks and snack foods.

“The applications seem endless, but it’s all about people trying to do better for themselves and to increase nutrition,” McIntyre said.

One estimate suggests one in eight Americans have already tried weight-loss drugs and one in five will be using them by 2030.

McIntyre says the high uptake of GLP-1 drugs in the United States is helping to boost demand for protein, which he says is a theme that is likely to play out around the world as other countries follow suit.

Users of GLP-1 drugs are being encouraged to eat protein to maintain muscle capacity so they don’t “waste away”.

More broadly, in the US, the tag “with added protein” is being added to a wide range of consumer products.

“It’s all happening on the whey side of things at the moment, but I believe that the MPCs [milk protein concentrates] will also catch up on the pace,” McIntyre said.

Commodity market watchers will be familiar with the GDT auctions, where Fonterra’s five “reference” products – whole milk powder, skim milk powder, butter, butter milk powder and anhydrous milk fat – are sold.

The reference products “inform” Fonterra’s farmgate milk price.

Products sold outside the platform tend to sell at much higher margins, which ultimately feeds through into Fonterra’s dividends.

For Fonterra, the price it pays its farmers for their milk is its biggest input cost.

“If you go back and have a look at the profits that Fonterra has announced in the last 10-15 years, it’s been a lot stronger in recent times despite the fact that it’s been a high milk price, so you would think if there’s a high milk price, that’d be difficult for Fonterra to earn as well,” McIntyre said.

“But what we’re seeing is both a high milk price and good earnings, which has been returned to the farmers in the form of a distribution or a dividend.”

Fonterra says it will take just three years to fill the gap in earnings left by the $4.22 billion sale of its consumer business to France’s Lactalis last year.

McIntyre said rising demand for protein was the most likely reason for Fonterra’s confidence that it can make up for the ground lost by the Mainland sale.

He said a “sea change” in demand had been underwritten by the enthusiastic take-up of GLP-1 drugs by Americans.

“It makes us feel more confident about the durability of the industry going forward, despite what we’ve seen with the divestment of the consumer business.”

Elisa Giusti, Fonterra’s Chicago-based president of global ingredients growth, said the trend towards protein had been accelerating over the last 10 years.

“In some contexts, you have seen – especially over the last two years – people referring to the protein boom but it was already happening – it was well on its trajectory.

“We were seeing pinnacle growth rates well before GLP-1s, but what GLP-1s have done have just compounded that reality,” she told the Herald.

“People understand the role of protein and what protein does when you consume it and why it is good for you.

“When you think of what happens when you take drugs like GLP-1s, the choices of what you consume become that much more critical.

“It’s bringing in more to the forefront than it already has been.”

Giusti said that for Fonterra, products sold outside the GDT platform have become more significant for the co-op’s portfolio.

“A lot of the non-GDT products, especially over the last decade in particular, have become very significant to the portfolio.

“The components of the milk bucket have done nothing but grow, significantly, in the last 20 years.

“The protein portfolio is incredibly significant to the portfolio and they are what the consumer is demanding.”

Fonterra’s main competitor in New Zealand, Open Country Dairy, has picked up on the US GLP-1 trend.

In February, Fonterra’s chief financial officer Andrew Murray said global demand for protein is “off the scale”.

Open Country’s chief executive Mark de Lautour said what happens in the US takes three to four years to spread through to the UK and Europe.

“I think it can only be good for us,” de Lautour said.

“With our free trade agreements with the UK and and Europe kicking in about that time, I think there’ll be continued demand for protein,” he told NZME’s The Country radio show.

“The Western markets are about losing weight, but likewise if you go to South East Asia or China, everything’s got 20% added protein.”

Nathan Guy, chair of the Meat Industry Association, said demand for meat worldwide remained strong and the uptake of GLP-1s was a factor in sparking a structural shift in the US food pyramid.

United Nations Food and Agriculture Organisation data showed global meat prices reached record highs in 2025, driven by strong demand for beef and sheepmeat alongside tight export supply.

“Demand is staying strong, and with processing capacity tight in a number of exporting countries, prices have remained elevated,” Guy told the Herald.

A big part of that is constrained cattle and sheep supply in key exporting regions as herds and flocks rebuild, which is limiting the volume available to market.

“The European Union and the United Kingdom are growing strongly for New Zealand in both volume and value, with lower domestic production lifting demand for our red meat.

“China remains the second-largest market for New Zealand red meat behind the US and a major anchor for global protein demand. Demand there will move with local economic conditions and the supply of other imported proteins, but it remains hugely important to the market.

“The rise of GLP-1 weight-loss drugs is supporting stronger demand for protein in markets such as the United States, as consumers place more focus on nutrient-dense food options.”

Guy said this was shifting preferences towards natural, high-quality protein – an area where New Zealand grass-fed meat is well placed.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.