New Zealand, a leading milk producer and butter exporter in the Southern Hemisphere, faces a challenge as half of its dairy industry's feed requirements cannot be met domastically, with palm oil extract making up half of the feed imports. The country's dairy sector relies heavily on imported feed, with milk production requiring nearly 75% of the available feed. Despite environmental regulations, dairy processors are reducing prices for producers who exceed certain non-animal fatty acid limits in their milk, aiming to decrease the use of palm oil extract. New Zealand expects to see a slight decline in cow herds over the next five years, but a rise in milk production due to improved lactation averages.