Farmers are approaching a pivotal period for investment decisions.
DairyNZ has just released an updated forecast for the 2025-26 season and its preliminary forecast for 2026-2027 – both portray a favourable outlook for farmers.
Driven by strong milk prices DairyNZ estimates farmers will receive an average payout of $9.92 per kilogram of milksolids (kgMS) for the 2025-26 season. With a forecast breakeven milk price of $8.36/kgMS, this points to an average surplus of around $1.56/kgMS for the season.
Season-to-date milksolids production (June 2025 to January 2026) is running 3.3% ahead of the same period last season. As seen last quarter, growth is South Island-led with Southland and Otago collectively up 7.9% in the year to date, while Canterbury is up 3.1%. In the North Island, Waikato and Taranaki have seen modest increases (1.7% and 1.9% respectively).
“The combination of relatively high payout expectations and strong production means many farms are tracking towards a very solid revenue season. For many farms margins will be comfortably above breakeven levels, despite increases in farm working expenses,” DairyNZ Head of Economics, Mark Storey says.
“Importantly, this season is not just about operating cashflow. The planned Fonterra Divestment represents a substantial one-off tax-free cash injection into the sector. The key question is how farms will use this one-off cash injection. Debt reduction, infrastructure upgrades, environmental investment, land development, and off-farm diversification are all potential uses. How farmers allocate this capital will shape both farm resilience and regional economic activity over the next 12-24 months.”
DairyNZ Chair Tracy Brown says the strong payout is encouraging, but cost control and efficiency remain essential.
“Farmers deserve all the success coming their way. It’s been a tough couple of years for some, and many regions are still fighting back from the effects of recent extreme weather. Regional feedback suggests farmer sentiment is positive but we’re all aware of how quickly international markets can turn,” she says.
Looking ahead to the 2026-27 season, DairyNZ forecasts a slightly lower average payout received. Key costs are forecasted to come down marginally, reflected in a slightly lower breakeven milk price at $8.31/kgMS. The average surplus is forecast to remain above $1, at $1.07/kgMS.
“There are a lot of unknowns on the horizon on the global front that have the potential to adversely impact farmers. Rises in oil prices or shipping costs flow through into fertiliser, transport and on-farm input prices and this is something to keep a close eye on. I’d advise cautious optimism,” says Mark.
The EconTracker is one of the DairyNZ tools funded by the Milksolids Levy.
Farmers have until 5pm on Friday 13 March to vote on whether to continue with the levy that funds DairyNZ.
“It's a good time to be a dairy farmer. Collectively we’re working well to grow our sector, but there’s more work to do. Continuing with the Milksolids Levy will ensure DairyNZ can keep backing farmers with economic insights like the EconTracker, and the research, development and advocacy that move our sector forward,” Tracy says.
Explore the latest figures and analysis at dairynz.co.nz/econtracker.
Note for the editor: The EconTracker presents national and regional averages and may not reflect individual farm circumstances.
These insights are powered by DairyBase, which integrates integrated data from New Zealand farms and agricultural and financial partners. Thank you to our DairyBase farmers for sharing their data to shape powerful insights and help our sector grow.
The breakeven milk price is the milk sale price per kilogram of milksolids to cover a farm’s costs in a season, excluding capital expenditure and principal repaid on loans. The forecast average payout is based on the estimated milk receipts for the specified season, along with dairy company dividends.
Media Contact
Kirsten Rose
Senior Corporate Communications Advisor
p: 027 383 6937
e: kirsten.rose@dairynz.co.nz
