What the Latest Milk Price Forecast Means for Dairy Farmers
DairyNZ has just released their latest Econ Tracker update, and while the headlines show rising costs, there’s still cause for optimism heading into the 2025/26 season.
Let’s break it down:
The Numbers First
The forecast breakeven milk price is now sitting at $8.68/kgMS, up from $8.41 last season. That’s a hefty lift — and it reflects what many of you are already feeling on-farm.
Higher tax obligations (thanks to stronger returns last year), increased feed, fertiliser, and energy costs — it’s all pushing the average farm working expenses up to $5.84/kgMS. That’s not small change.
But here’s the good news: the predicted average payout is still strong at $10.21/kgMS. So while your cost base has gone up, the overall margin remains positive — especially for well-run farms with a grip on spending.
What’s Driving the Costs?
Fertiliser prices are leading the charge, with phosphate up 34% and urea 40% compared to May last year. This is largely due to global supply issues, export restrictions from China, and rising gas prices.
Fuel is another watchpoint — crude oil surged 17% recently on the back of tension in the Middle East. New Zealand’s reliance on imported fuel means volatility is the new normal.
Feed costs are also climbing, with most commodities up 6–37% over the past year. Palm kernel is one of the few exceptions.
So What Can You Do?
Despite the pressure, the outlook isn’t doom and gloom. Interest rates are easing, and debt levels should be dropping. Now is the time to build resilience in to the business.
The key? Plan early and build flexibility into your budget. Focus on your breakeven number, know your margins, and be ready to adjust as conditions change.
As always, the national averages don’t reflect your unique business. If you’re not sure what this means for your farm, we’re here to run the numbers with you.
Forecasts change — but clear eyes and good planning never go out of fashion.