The Ministry for Primary Industries forecasts food and fibre export revenue rising 6 percent to $64.3 billion in the year to 30 June 2026, building on the previous year’s record. That is a genuinely strong result, and it needs reading carefully before anyone assumes farm profitability follows.
The sector breakdown
- Dairy — up 5 percent to a record $28.6 billion, driven by strong global prices, a favourable exchange rate and record milk production.
- Meat and wool — up 7 percent to $13.2 billion.
- Horticulture — up 7 percent to $9.5 billion, on record kiwifruit and apple volumes plus elevated prices.
- Forestry — up 2 percent to $6.3 billion, the weakest of the major sectors.
MPI has the sector on a path toward $70 billion by 2030.
Revenue is not margin
This is the distinction that matters on farm. Export revenue measures what the product sold for. It says nothing about what it cost to produce.
The largest cost movements in recent years have come from feed, fertiliser, fuel and interest. A farm carrying significant debt is more exposed to interest rate movements than to a twenty-cent payout change — which is why the Reserve Bank’s move to 2.50 percent in July matters alongside the export figures.
The number that determines resilience is cost of production per unit — per kilogram of milksolids, per kilogram of meat. That sets the commodity price at which you break even, and two farms with identical output can have completely different survivability.
Three things driving the result are outside your control
MPI attributes the lift to strong global prices, growth in apple and kiwifruit volumes, and a favourable NZD/USD exchange rate.
Two of those three are external. A currency movement or a shift in Chinese import demand changes the payout without anything changing on farm, which is the case for treating a strong year as an opportunity to strengthen the balance sheet rather than as a new baseline.
The practical version: in a strong year, pay down debt, catch up deferred maintenance and infrastructure, and use income equalisation to smooth taxable income into the years that follow. Income equalisation exists precisely for this and is consistently under-used.
Forestry is the outlier
Two percent growth against 5 to 7 percent elsewhere reflects a sector under different pressure. Log export prices are set internationally, and domestic processors compete for the same logs — when export prices are strong, processors face input cost pressure.
For forest owners the ETS position interacts with this. Post-1989 forest registered in the scheme earns units as trees grow with a symmetrical obligation to surrender on harvest, and harvest liabilities arrive when cash depends on timber price rather than carbon price.
What a strong year should fund
- Debt reduction, which improves resilience directly and is the single best use of a good year for a leveraged operation.
- Deferred compliance infrastructure — effluent storage, riparian fencing and planting, water systems. These are structural costs now rather than one-offs, and doing them in a strong year is considerably easier.
- Emissions measurement. Processors, banks and export customers are increasingly asking, and farms with credible data are better placed in those conversations.
- Income equalisation deposits, smoothing taxable income into the next poor year.
What to watch next
The forecast rests on prices and currency holding. Both move. A business planning capital commitments on the strength of a forecast should model the downside — what happens at a payout materially below forecast, with current debt servicing costs.
MPI publishes the Situation and Outlook for Primary Industries twice yearly with sector-by-sector forecasts, free and under an open licence. DairyNZ publishes its Econ Tracker with break-even estimates, and Beef + Lamb New Zealand publishes farm survey data.
Figures: Ministry for Primary Industries, Situation and Outlook for Primary Industries, forecasts for the year to 30 June 2026. General information only, not financial advice.
