Article summary: Late 2025 brought a clear signal: forecasts can move quickly, and when milk price expectations soften, costs rarely fall at the same speed. Fonterra narrowed its 2025/26 forecast range and lowered its midpoint, while ANZ also trimmed its forecast and pointed to falling global dairy prices and strong supply. This article lays out a grounded response plan that keeps you focused on the controllables: pasture utilisation, smarter supplement decisions, cashflow resilience, and weekly decision hygiene.
When the payout softens, the margin gets decided in the paddock
A milk price revision does not change what you have already spent, but it absolutely changes what your next decisions are worth.
Late 2025 was a timely reminder that payouts can move down faster than costs. The key is responding without panic-cutting the things that protect next season’s performance.
So, what actually changed, and what should you do next?
What changed in November 2025 (the facts, not the feelings)
Fonterra updated its 2025/26 forecast in late November 2025:
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Forecast range narrowed from $9.00–$11.00/kgMS to $9.00–$10.00/kgMS
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Midpoint reduced from $10.00/kgMS to $9.50/kgMS
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Forecast milk collections increased from 1,525 million kgMS to 1,545 million kgMS
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The update referenced stronger milk flows and ongoing downward pressure on global commodity prices, including a run of recent Global Dairy Trade price drops
ANZ also revised its view (21 November 2025):
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ANZ cut its 2025/26 forecast to $9.65/kgMS (from $10.00/kgMS)
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It linked the revision to falling global dairy prices (particularly butter) alongside strong milk production in New Zealand and other major exporting markets
Whether you’re paid on a co-op forecast, a processor step-up, or a regional price grid, the signal is similar: the market is telling you to protect efficiency.
What the revision really means on-farm
When price expectations fall but costs stay “sticky”, three things tend to happen:
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Purchased feed feels more expensive overnight
Not because the invoice changed, but because the milk revenue per unit of feed has. -
The penalty for sloppy pasture allocation increases
Every extra kgDM you waste as poor utilisation becomes more costly. -
Short-term fixes get tempting
Overgrazing, chasing litres with low-response supplements, or cutting maintenance spend that later bites you.
The goal is not to “slash costs”. The goal is to tighten decisions.
The grounded response plan
1) Feed first: protect pasture utilisation before you touch anything else
Pasture is still your cheapest, most controllable feed. When payout pressure rises, pasture utilisation becomes the quickest lever you can pull without damaging long-term performance.
Double down on pasture allocation discipline
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Keep residuals honest. If residuals are drifting up, you’re paying for feed you did not harvest.
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If residuals are drifting too low, you’re borrowing from next round’s growth and risking slower recovery.
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Match rotation length to growth rate, not to the calendar.
Avoid overfeeding when response is low
A common margin leak in softer payout periods is “comfort feeding”:
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topping up supplements because it feels safe
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feeding the same rate out of habit
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chasing litres when the pasture response is already strong
Instead, ask one blunt question each week:
What is the likely milk response per unit of this supplement, right now?
If response is low, the right move is often:
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tighten allocation (better utilisation)
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lift quality pasture intake (timing, residuals, graze order)
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reduce low-response supplements (especially if they substitute for pasture)
Re-check supplements using a simple margin lens
You do not need perfect numbers. You need a consistent method.
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What is the supplement costing you per kgDM?
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What is it costing you per MJME (energy)?
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What response are you actually seeing (or can you reasonably expect) in your system right now?
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Is it adding production, or mostly substituting pasture?
If you want one practical rule:
Do not buy expensive MJ unless you have a high-confidence response.
2) Cashflow buffers: switch to a working-capital mindset
A softer payout forecast is not just an “income” issue. It is a cash timing issue.
Treat cash as feed for the business
When the market turns, the farms that stay calm are the ones with options:
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feed on hand
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headroom on facilities
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clear repayment schedules
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visibility on upcoming bills
A simple buffer checklist
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Update a rolling 13-week cashflow (even a rough one).
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Identify the next 3 “lumpy” outflows (fertiliser, regrassing, tax, repairs, interest).
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Decide in advance what gets delayed if the season tightens further, and what does not.
Cut costs without sabotaging next season
Aim for “trim” not “damage”.
Typically worth protecting:
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pasture base (fertility that maintains growth and persistence)
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reproduction and animal health (you pay for mistakes twice)
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maintenance that prevents breakdowns in peak workload
Typically worth challenging:
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low-ROI supplements (especially where response is unclear)
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discretionary capex that does not protect production or reduce labour
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duplicated services and subscriptions
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“nice-to-have” upgrades you can revisit when the market improves
3) Decision hygiene: win the season with weekly numbers
When prices are moving, decision quality matters more than decision speed.
If you only do one thing from this article, do this:
Pick a weekly rhythm and stick to it.
Your weekly scorecard (keep it simple and consistent)
Pasture
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Average farm cover (or equivalent pasture inventory measure)
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Pre- and post-grazing targets (and how often you are hitting them)
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Growth rate trend (up, flat, down)
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Demand vs supply (is the wedge opening or closing?)
Supplements
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kgDM fed per day
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cost per kgDM
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cost per MJME (or your preferred energy measure)
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expected response and actual response (even if it’s an estimate)
Herd
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body condition trend
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in-calf or mating performance indicators (season-dependent)
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key health events that affect intake and utilisation
A useful habit: write one line each week:
“What are we changing this week, and why?”
That single discipline prevents drift.
A practical “this week” action list
If the payout forecast has been revised down and you want immediate traction:
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Reset your pasture targets for the next 14 days
Covers, residuals, rotation length, and graze order. -
Audit supplements with fresh eyes
Keep what reliably returns margin. Pause what is habit or insurance. -
Lock in a weekly numbers routine
Same day, same measures, same questions. -
Update your short-term cashflow view
Identify the next lumpy costs and decide what’s adjustable. -
Protect next season’s engine
Do not mine pastures or compromise reproduction to “save” money that costs you later.
Where Pasture.io fits
When payouts soften, your advantage comes from seeing change early and acting with discipline.
Pasture.io helps you keep the fundamentals tight:
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tracking pasture supply and utilisation trends
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checking growth versus demand
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keeping grazing and supplement decisions visible across the team
Because when costs are sticky, utilisation and decision hygiene are the levers you control.
- The Dedicated Team of Pasture.io, 2025-11-25