Dairy and Kiwifruit: Two Bright Spots for Rural NZ in 2025
At Rural CA we keep a close eye on the industries that matter most to our clients. Right now, dairy and kiwifruit are both having big seasons — but in quite different ways.
Dairy – steady and resilient
Dairy continues to be the backbone of New Zealand’s export economy, worth over $20 billion a year. Production is holding steady: last season 20.5 billion litres of milk were processed into 1.88 billion kg of milk solids. Average production per cow is up slightly, showing the efficiency gains farmers are making.
The pay-out is the first big story. Fonterra’s 2025/26 forecast is sitting at $10 per kg, while 2024/25 has been revised up to $10.15. That’s welcome news for on-farm cashflow. It’s also a reminder that strong export returns can put pressure on retail prices — I won’t mention butter.
The second big story - Fonterra has agreed to sell its consumer and associated businesses to Lactalis for a very handsome $4.22 billion (subject to certain conditions). The goal is to sharpen margins and focus on areas that drive stronger returns. For shareholders, this could mean a targeted tax-free return of around $2 per share.
Kiwifruit – record-breaking growth
Zespri’s 2024/25 season smashed expectations: global sales topped NZ$5.03 billion, up from their NZ$4.5 billion goal, driven by a record 220.9 million trays sold worldwide. Direct returns to the industry exceeded $3 billion.
Zespri’s 2025/26 August OGR forecast reflects the strong start to the season, with per-hectare returns expected to reach record levels for all categories other than SunGold and Organic Green.
Key markets such as Europe and North America have shown strong demand. That said, headwinds remain in Asia, where economic challenges and softer demand mean sales strategies are cautious.
Behind it all, Zespri is already planning for the next decade. With its original 10-year plan now complete, it is developing a 2035 strategy focused on three priorities: driving brand-led demand, transforming the global supply chain, and crafting the product portfolio of the future — to keep delivering strong value for growers.
What this means for our clients
- Cashflow confidence – higher dairy pay-outs and strong orchard returns mean more flexibility to invest, reduce debt, or plan succession.
- Diversification opportunities – stronger balance sheets open doors for off farm investments.
- Stay alert to volatility – commodity highs can turn quickly. Building resilience into budgets and cashflow forecasts remains critical.
- Think long term – climate and sustainability pressures aren’t going away. Farmers and growers who plan for this will be in a stronger position.