There are three other factors making up this perfect storm: Increased supply expected to come onstream from European competitors, an end to drought conditions in New Zealand which will encourage farmers to continue milking, and, continued weak demand from NZ's major export markets.
There's not much the dairy sector can do about three factors mentioned above -- at least in the short term. But increased professionalism all round appears to have mitigated the potential for major fallout -- particularly in the Chinese market -- from the malicious 1080 threat which was confirmed by NZ Police last week after leaks to journalists forced them to bring a planned announcement forward.
The Ministry of Primary Industries confirms that China was briefed at the same time as New Zealand's "other key trading partners" in February. "We are in regular communication with Chinese authorities, which happens as part of business as usual, that's not exceptional," the MPI spokesman told us.
"Those communications happen through embassies or postings in foreign countries, so with China that has been happening through the New Zealand embassy in Beijing."
It has also been happening through the personal diplomacy Trade Minister Tim Groser exercised after he flew to China recently for discussions on how to expand New Zealand's free trade deal with China.
For its part, China's General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) -- the department responsible for inspecting commodities imported into China -- issued a formal statement last week, saying: "China has already taken steps regarding New Zealand milk powder imports and will demand every shipment has an official New Zealand certificate guaranteeing it does not contain sodium monofluoroacetate [1080]."
Major Chinese media ran largely matter-of-fact pieces, detailing the threat and outlining commonsense measures for consumers to further protect themselves -- notably, checking the packaging for any signs of tampering or foul play -- the same advice that has been given to New Zealand parents.
The smooth reaction owes a great deal to the co-ordinated response that Ministry of Primary Industries (MPI), the Government, Fonterra and other industry players had worked up by the time the police confirmed the existence of what was a four-month-old threat. Had the information leaked out before officials had the chance to get in front of it, there's every chance a more hysterical reaction could have eventuated.
Despite that, at least one exporter has since reported problems over product held up at the Chinese border -- an issue that has roused consternation among the ranks of the smaller infant formula manufacturers.
MPI deputy director-general Scott Gallacher says: "MPI understand the product referred to was still en route to China at the time of the public announcement of the criminal blackmail threat, and only arrived in China after the exporter's claim was made.
"We have checked directly with our counterparts in China on this specific issue and they have advised us that they are not aware of any consignments being held up as a result of this criminal blackmail threat."
The normal clearance process for infant formula into China is stringent at the best of the times and can take up to 40 days.
"MPI has offered assistance to the relevant exporter, but they have explicitly asked MPI not to contact anyone at this stage."
