DairyNZ’s Econ Tracker forecasts higher breakeven milk price amid rising costs

The key updated figures on the Econ Tracker include the current DairyNZ breakeven milk price forecast of $8.68 per kgMS. Photo / DairyNZ

Content brought to you by DairyNZ

DairyNZ’s latest Econ Tracker update shows a rise in the forecast breakeven milk price for the 2025/26 season, driven by increases in essential on-farm costs.

The key updated figures on the Econ Tracker include the current DairyNZ breakeven milk price forecast of $8.68 per kgMS, predicted average payouts of $10.21 per kgMS, and average farm working expenses of $5.84 per kgMS.

DairyNZ chair Tracy Brown said recent analysis highlighted notable annual increases in some key farm expenses.

“The cost of input prices has increased at a greater rate than the rate that the milk price has increased,” she told The Country’s Jamie Mackay.

“So it has caused some squeeze for farmers.”

Brown said the breakeven milk price was up 27 cents on the previous season.

One expense is fertiliser, with prices rising sharply due to global supply constraints, export restrictions from China, and increased natural gas prices.

Compared to May 2024, phosphate prices are up 34%, and urea up 40%.

“That’s been significant,” Brown said, but it wasn’t the only factor.

“Crude oil prices have recently surged by 17%, with the instability in the Middle East.

“Feed prices are up [around] 6 to 37%, with the exception of PK, which is down slightly, but other feed costs are up.

“Energy’s up - there are some input pressures there for farmers.”

Despite the elevated costs, DairyNZ said the outlook for the 2025/26 season remained positive, with robust milk price forecasts, and farmers were likely to benefit from reduced debt levels and easing interest rates.

Another positive announcement was made by Agriculture Minister Todd McClay at Fieldays earlier this month: the launch of the Resilient Pastures programme.

The $17 million, seven-year collaborative science and research programme aims to solve one of New Zealand agriculture’s most pressing and important challenges.

Listen below:

Farmers have been saying pastures are not lasting as long (persisting), and DairyNZ analysis suggests pasture renewal rates are increasing, while pasture harvest is declining.

“This has become a bigger issue with climate change,” Brown said.

“So, in Northland, we’ve seen farmers up there have been losing 1 tonne of dry matter per hectare per decade, and out of the Waikato, it’s half a tonne.”

The programme will bring together farmers and industry to identify pasture species and management practices that are more resilient to climate variation and extreme weather events, both now and in the future.

“We’re pretty excited,” Brown said.

“17 farmers have expressed an interest in being involved in the research just since we’ve announced the launch of the project.

“So that’s really, really positive.”

In more exciting news, DairyNZ is celebrating 60 years of its Economic Survey.

“We’ve been going since the 1960s,” Brown said.

There had been plenty of interesting data to explore since then, she said.

“Back then, the average farm milked 92 cows across 59 hectares, 1.6 cows per hectare.

“Later on, in the 2010s, we’re more like 410 to 440 cows, on 144 hectares, 2.9 cows per hectare.

“So you can see the productivity gains that have been made over that time.”

Brown said it was important to have this long-term data.

“It helps us look at how the sector’s changed, it helps us support, national and international reporting on dairy.

“So we’re really proud that we’re able to celebrate 60 years of the Economic Survey.”

Explore DairyNZ’s Econ Tracker further here.