Dairy Boom Adds $4.5B to NZ Economy as Farmers Reap Record 2024/25 Milk Prices

New Zealand’s dairy sector is celebrating a standout 2024/25 season, with soaring production levels and record milk prices delivering a windfall to rural communities and strengthening the national economy. According to Agriculture Minister Todd McClay, this exceptional performance is injecting billions of dollars into the economy, reinforcing the dairy industry’s role as a pillar of New Zealand’s prosperity.

$4.5 Billion Windfall for the Nation

The dairy sector’s resurgence is underscored by a projected $4.5 billion increase in farmgate revenue for the 2024/25 season. With milk prices forecast to reach around $10 per kilogram of milk solids—the highest levels since the 2021/22 peak—farmers across the country are reaping the benefits of a season marked by strong global demand and efficient farm management.

“Dairy exports are a cornerstone of New Zealand’s economy, contributing $4,700 for every New Zealander,” McClay noted. “This is good news for farmers, rural towns, and our economy as a whole.”

The season’s gains reflect the synergy of favorable international market conditions and domestic improvements in herd management, feed quality, and environmental practices. Grass-fed New Zealand dairy products remain in high demand globally, prized for their quality and sustainability.

Government Action: Clearing the Path for Growth

Minister McClay emphasized that the Government is working alongside the sector to ensure the rewards of high productivity reach the farm gate. This includes a sweeping suite of reforms aimed at reducing regulatory burdens, enhancing water rights clarity, and opening new trade opportunities for farmers.

Key policy shifts and initiatives to support the rural sector include:

• Replacing the National Policy Statement for Freshwater Management, to deliver practical environmental outcomes.

• Reforming the Resource Management Act to streamline land use planning.

• Halting unworkable regulations around winter grazing, stock exclusion, and Significant Natural Areas (SNAs).

• Rebalancing Te Mana o te Wai, restoring water rights fairness across users.

• Exempting agriculture from the Emissions Trading Scheme, easing compliance costs.

• Disbanding the He Waka Eke Noa emissions partnership.

• Repealing the Ute Tax, which disproportionately affected rural operators.

• Launching a rural banking inquiry to address access to fair finance.

• Halting costly Freshwater Farm Plans proposed by the previous government.

• Completing Free Trade Agreements that unlock new international markets.

“These reforms are restoring confidence, removing red tape, and making it easier for farmers to focus on what they do best—producing world-class food and supporting their communities,” McClay said.

Rural Ripple Effect: Boosting Local Economies

The strong dairy performance is not only a win for farmers but also a lifeline for small businesses, contractors, and service providers in rural towns. Increased spending power on farms typically translates to more employment, investment in infrastructure, and stronger regional economies.

“Rural communities are the engine room of this economy,” McClay said. “When farmers are doing well, it flows through to local businesses, regional jobs, and a growing economy for all New Zealanders.”

Looking Ahead

With the global dairy market continuing to favor premium, sustainable products, and the domestic policy landscape becoming increasingly supportive, the outlook for 2025/26 is equally optimistic. New Zealand’s dairy sector appears well-positioned to lead economic growth and innovation, reaffirming its status as a national powerhouse.