But since 1995 dairy prices have been rising. And Nigel Mitchell, Fonterra's global manager of trade strategy, says we can thank that favourite monster of the anti-globalists: the World Trade Organisation (WTO).
"The dairy industry is one of the few industries that has a truly global spread. Almost every country in the world has a dairy industry except for city-states like Singapore and Hong Kong," he says.
"Milk and the products you derive from milk have universal appeal - the most basic food you can imagine.
"Precisely because milk is produced everywhere, the prices that farmers get paid for milk are politically sensitive, and therefore governments universally take a close interest in how their dairy markets operate. So we have the situation where markets tend to be regulated and insulated by government policy."
Until 1995, dairying and agriculture generally were left out of gradual moves to lower trade barriers because almost every country wanted to protect its local farmers.
But in the last round of world trade talks in 1995, that changed. All WTO members agreed to open up 5 per cent of their domestic dairy markets to imports by last year, to cut the volume of subsidised dairy exports by 21 per cent and to cut spending on subsidised dairy exports by 36 per cent.
Those promises, says Mr Mitchell, "have been faithfully carried out".
"Cumulatively, over five or six years, it has been very significant."
The biggest effect has been in the European Union, which is the world's biggest dairy producer (23 per cent of world production) and the biggest exporter (38 per cent). (New Zealand is the biggest single exporter, holding 31 per cent of the world export market by itself.)
"Because of commitments on controlling production and subsidies, the European Union is having less and less of a role in international dairy trade," Mr Mitchell says.
"As it has gone back a little bit, that has provided us with opportunities that have always been latent. We have the production base here, but it has always been suppressed by others due to controls on subsidised production and exports.
"Our [NZ] milk production is up 45 per cent since 1995. That will continue, perhaps at a lesser pace."
After the last attempt to push further liberalisation failed at Seattle in 1999, Mr Mitchell's hopes now rest on the WTO round due to begin in Qatar on November 9. The Cairns Group of agricultural exporters is proposing that this time export subsidies should be phased out completely.
That won't happen overnight. But Dr Adrie Zwanenberg, the world dairy analyst for Rabobank in Holland, expects some progress.
"My prediction is that in the next WTO, the biggest step - and it will be a small step - will be in lowering export subsidies, more than in increasing market access," he told the Herald this month.
"The European Union and the United States will prefer to protect their own markets above protecting their export subsidies.
"That will have an effect on the world price. If the US cannot put their surplus products on to the world market, that means the world price level will go up."
He says the pressure to cut subsidies will be strengthened by the likely expansion of the European Union to take in Eastern European countries, including one of the world's biggest dairy producers, Poland.
"Poland alone has 1 million dairy farmers with an average herd size of four cows per farm," he wrote recently. "Introducing this many new farmers into a system which is regulated by quotas is likely to result in major administrative difficulties and may even issue in the demise of the official quota system."
Dr Zwanenberg says there is now an underlying upward pressure on dairy prices caused by world demand for dairy products rising at about 2 per cent a year, while production is growing at only 1 per cent.
In Europe, production is actually falling in line with the subsidies.
Demand is growing by only 1 per cent a year in rich regions such as Europe and North America. But, according to a recent report by PA Consultants, both demand and production have been growing at 4 per cent a year in India and Pakistan, 5 per cent in South America and 6 per cent in China.
The potential in these growth markets is enormous. While the average person in rich countries consumes 200 to 300 kg of dairy produce a year, people still consume only 130 kg each in South America, 72 kg in India and just 9 kg in China.
In total, in the latest available year (1996), the world produced 467 million tonnes of cow's milk and 72 million tonnes of milk from buffalo, goats and other animals, making a total of 539 million tonnes.
Dr Zwanenberg estimates that almost half of this was consumed on farms or in villages without ever going near a factory.
Of the rest, he estimates that 110 million tonnes went into cheeses, 90 million tonnes was sold as liquid milk, 82 million tonnes as butter and skim-milk powder, 14 million tonnes as yoghurt and other fermented products, 13 million tonnes as wholemilk powder and 4 million tonnes as condensed milk.
He says demand is growing strongly for yoghurt and liquid milk and for cheeses, especially for pizzas and hamburgers. Butter production is dropping in rich countries for health reasons, but is still growing in India, where it is used for cooking.
The fastest growth is in 'functional foods', to provide extra calcium, less lactose, special foods for children or old people, and so on.
Creating these foods is forcing dairy companies to spend much more on research and development, and on marketing branded products globally.
These costs, combined with the growing buying power of supermarket chains and a freeing up of trade and investment, have sparked an explosion of dairy industry mergers and takeovers.
"The dairy industry is lagging behind in that regard because it has these special characteristics that relate to the politics of the business," says Nigel Mitchell.
But it is catching up fast. Dr Zwanenberg says that from January 1998 to April this year, there were 490 mergers and takeovers in the industry - one every two and a half days.
In some products, a handful of companies already dominate the world market: Nestle and Unilever in ice cream, Nestle in condensed milk, Danone, Nestle and Yoplait in yoghurt.
In the next few years Dr Zwanenberg expects consolidation to continue until a few giants control the whole international dairy trade, much like the present-day oil business.
New Zealand is now in the thick of this activity. At home, the two big dairy cooperatives have joined to form the Fonterra group. Overseas, Fonterra has bought two big Mexican dairy companies to become the number one player in the Mexican cheese market, formed a joint venture with the leading Australian company Bonlac, and forged alliances with Nestle in South America, with Dairy America to export skim-milk powder out of the US, and with Arla in the yellow fats market in Europe.
In a speech this month, Fonterra chief executive Craig Norgate said: "We are a New Zealand company and we are a multinational company.
"We offer New Zealanders the chance to work as part of a truly global network. That's unique.
"We want New Zealand's best and brightest to want to work for us and with our partners, such as Nestle, internationally. We want every young New Zealander to aspire to work for us in the same way that they might aspire to represent New Zealand in sport."
As Fonterra grows, so will its risks. It will become less like a tortoise and more like a hare, running hard to beat its global competitors in an increasingly cut-throat market.
But, as Dr Alan Jackson of the Boston Consulting Group said recently: "Of all NZ industries, dairying is by far the best placed to become a truly global market leader in both consumer and industrial products. A failure to build on its regional beachheads and become a leading global player would be an inexplicable waste of an unparalleled opportunity."
