Efficiency and management distinguish farms in a high-cost era

The 2025–26 season is expected to remain strong for the dairy sector. The milksolids payout is estimated at approximately $10.15 per kilogram of milksolids, and production is forecast to reach its highest level in a decade. The production estimate is about 4.3% above the previous season.

Fonterra farmers have also received a tax-free capital return following the sale of the Mainland Group consumer brands. That return comes alongside the income generated from the current dairy season.

The outlook for 2026–27 is described as cautiously positive. Fonterra’s initial payout forecast is $9.75 per kilogram of milksolids, with a projected range from $8.00 to $11.00. Production is expected to remain steady.

At the same time, the estimated breakeven milk price for 2026–27 is about $8.79 per kilogram of milksolids. The expected increase reflects higher interest rates and rising costs on farms, as well as continued volatility in global markets.

Those conditions affect the cost and availability of key farm inputs, including fertiliser, feed and fuel. The combination of higher operating costs and a higher breakeven price places greater emphasis on the way farms manage their resources and finances.

Recent favourable seasons have increased incomes across the sector. They have also highlighted the role of efficiency and strong management. Farmers can use the stronger seasons to build financial buffers, manage debt and invest in improvements to productivity that support more resilient performance.