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Thailand’s decision to remove dairy import tariffs for New Zealand and Australian products from January 1, 2025, is rapidly transforming regional dairy trade dynamics. The policy significantly lowers the landed cost of imported dairy ingredients, particularly skim milk powder and whole milk powder, creating immediate advantages for exporters while challenging Thailand’s domestic dairy sector. Imported dairy inputs are now substantially cheaper than locally produced raw milk, encouraging Thai processors to increase reliance on overseas supply.
The shift is especially important for Thailand’s food and beverage manufacturers, which depend heavily on dairy ingredients for recombined milk, confectionery, and beverage production. Domestic raw milk prices remain around THB 21–23 per kilogram, nearly double the equivalent import cost, making imported dairy economically attractive. Early 2025 trade figures already point to rising whole milk powder imports from New Zealand, confirming that processors are responding quickly to the new pricing environment.
New Zealand appears positioned to capture the largest gains under the revised framework because its exports face no volume restrictions under the free trade agreement. Once approvals are secured, shipments can enter Thailand duty-free without quota limitations, giving New Zealand exporters strong flexibility to expand volumes and increase market share. Australia also benefits from tariff removal, although its exports remain tied to quota allocations, with tariffs outside those quotas climbing as high as 194.4%.
Thailand’s inward processing-style refund mechanism adds another competitive layer for exporters and processors. Dairy ingredients imported for further processing and re-export can qualify for duty refunds if companies comply with documentation and export timelines. The system strengthens Thailand’s role as a regional dairy processing hub, improving the competitiveness of manufacturers using imported dairy ingredients for export-oriented production across Asia.
Despite the liberalisation measures, Thailand continues balancing trade openness with support for local farmers. Strict compliance procedures remain in place, including approvals from the Department of Livestock Development and trade authorities, while some dairy categories still operate under WTO-linked quotas. Authorities also require certain importers to purchase domestic raw milk to absorb local oversupply. Over the longer term, analysts expect stronger import penetration, increased industry consolidation, and greater productivity pressure on Thailand’s dairy producers as Oceania exporters deepen their influence in the market.
Source: Dairynews7x7 27 May, 2026 From Our Partner Channel
