Starting your budget


3 min read

Include in your budget To start your budget Key budgeting dates Involve staff and stakeholders Additional resources

Budgeting for your dairy farm is all about planning your income and expenses. Remember to account for every source of income, such as milk and stock sales, and all outgoings, like farm expenses, loan repayments, and tax. You'll need accurate records to forecast future income and costs, and it helps to involve key partners in the process. Regularly update your budget to reflect any changes, and always involve your staff in discussions around spending. Also, don't overlook the expertise of rural professionals. They can offer insight into market trends and help you optimise your farm's productivity and profitability.

Before starting your budget it pays to gather and organise a few key things.

Include in your budget

Budgeting is simply planning your cash income and expenditure, but do you know which key income sources and expenditure to include in your budget? This is the first step to starting your budget.

You will need to forecast:

  • Income from all sources, e.g. milk, stock sales, other income
  • Farm working expenses
  • Interest and lease payments
  • Loan repayments (principal)
  • Drawings
  • Planned capital expenditure, e.g. purchasing stock, motorbikes
  • An allowance for tax

To start your budget

You need accurate records, past annual accounts, cashbooks, bank account information, input from key partners and a budgeting tool.

Accurate records for forecasting the coming season

  • Production targets
  • Forecasted income
  • Forecasted expenses
  • stock reconciliation
  • Management calendar
  • Key farm policies or procedures which impact on expenditure

Past annual accounts, cashbooks, bank account information

  • Reviewing historical data is a great start. Some aspects of your business will remain the same and won’t require changes to the amount of money you need to spend making forecasting an amount easier.
  • Talk to your banker or Chartered Accountant to gather your historical data or have a look back on past DairyBase reports.
  • If you are developing a budget for the first time, talk to your banker, Chartered Accountant or contact your local DairyNZ Regional team member to get access to the latest DairyBase benchmarking figures for your region, or gather data from the DairyNZ Economic Survey and the Economic Tracker Tool.

A budgeting tool

  • An excel spreadsheet, software programme or a pen and paper
  • Try DairyNZ's budgeting tools here

Input from key partners

  • A spouse, mentor, business partners, farm management consultant, Chartered Accountant or banker

Key budgeting dates

Throughout the year you need to prepare, review and update your budgets: monthly, before your financial year starts or season begins, at season end and when change occurs.


Update and monitor actual income and expenses against what was forecast.

Two or three months before your financial year or season begins

Prepare forecast annual and monthly cashflow budgets for the season ahead. Try to identify capital expenditure opportunities. Assess the impact of purchasing decisions by preparing a business case to determine which items will have the best return on investment (ROI) and prioritising purchases based on any compliance requirements.

Season end

Compare actual to forecast figures for the season finishing, use these to inform your forecast budgets and farm management plans for the next season.  This is also a good time to review key performance indicators.

When change occurs

  • Milk income is reforecast - keep up-to-date with milk company announcements and calculate the impact the change will have on your budget
  • Expense cost variations - fuel prices increase, feed costs change from what you had planned
  • Major unplanned expenditure - new tractor, additional bought in feed
  • Unexpected changes to production or adverse events - floods or drought

Involve staff and stakeholders

Engage your staff and other key stakeholders in relevant parts of your budgeting process. Be transparent about expenditure levels and ask for ideas on how to make cost-effective decisions.

Working in a business inevitably means working with other people who will have direct and indirect influences on how your business performs and how well (or poorly) you are able to stick to your budget and achieve business goals.

It may be useful to develop a farm finance policy staff have access to and ensure they understand spending decisions, delegated authority and desired outcomes.

Sensitivity analyses are also an important stakeholder communication tool.

Take advantage of the rural professionals who support your business (banker, Chartered Accountant, farm management consultant, veterinarian, supply store staff, and company representatives). They can provide you with a range of valuable information on market trends, input costs, and general advice on how to fine-tune your business to be productive and profitable.

Developing and maintaining a budget

Last updated: Dec 2023

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