Spring conditions are strong — but planning still matters

El Niño: make the most of now, but plan for dry conditions

The evidence suggests New Zealand has entered a strong El Niño phase. The real question is not whether conditions may become challenging, but how much impact farmers should plan for and how quickly they are prepared to act if the season turns dry.

The key is to balance current opportunity with future preparedness. Good pasture growth and favourable conditions should be used well, but businesses should also have a clear plan for what they will do if rainfall drops away.

Experience from previous dry summers suggests that businesses which manage these periods best tend to do three things well:

1. Monitor conditions closely and set clear trigger points for action.
2. Act early and decisively when those trigger points are reached.
3. Contain the impact of a dry period to the current season wherever possible, rather than allowing it to flow into next season’s production or financial position.

One observation from working with farming businesses is the wide variation in risk appetite. Many farming businesses are comfortable accepting a high level of climate and product-price risk. Milk price tools, for example, are now more widely available, yet uptake remains relatively low in many cases.

For farmers, it may be worth having a kitchen-table discussion about how much risk their business is prepared to carry. That discussion can help frame practical decisions about feed, stocking rate, milk price management, cashflow and timing of key interventions.

 

AgTech: opportunity, readiness and risk

AgTech is now part of everyday business discussion. The questions farmers are asking are becoming more practical: what technology should we adopt, how should we use it, how does it integrate with what we already have, and what is the real return on investment?

There are also some basic readiness questions that every farming business should be asking. How reliable is your internet connection? How well are data and insights being shared with the whole farm team? Are files backed up properly? How are you managing cybersecurity? And, importantly, how could AgTech and AI improve productivity, decision-making and communication within your business?

These questions are relevant to all farming businesses, regardless of size or system. The next five years have the potential to significantly change how farmers farm, but that change will require good judgement, investment, training and a clear understanding of risk.

For now, farmers should enjoy the spring conditions and make the most of the opportunities in front of them. At the same time, they should take the time to put sensible plans in place — for dry weather, for market volatility and for the technology changes that are already reshaping farm businesses.

 

James Allen, AgFirst

The dairy outlook for the 2026-27 season looks positive with higher-than-average temperatures and good rainfall across the country through early September alleviating some early spring feed deficits. Farmgate milk price is now at $9.50/kgMS. Increases in the GDT over the last 4 trading events have recovered most of the June-July drop and the NZD exchange rate remains relatively low improving the outlook since July. Rabobank has increased its expectation of milk price to $10 per kgMS for the 2026/27 season. Forecast farmgate milk price remains at a midpoint of $9.70 for the 2025-26 season. Early September communication from Fonterra has indicated a dividend around 50c per share.

An El Niño event on the horizon is a key talking point for most farmers. NIWA (Seasonal Climate Outlook) currently forecasts below normal rainfall through most of the country and less high-rainfall events through September and November with key risk areas being the Northern and Eastern North Island and the Northeastern South Island. Strategies most widely discussed are: Earlier planting of summer crops, use of leafy brassicas or chicory instead of bulb crops, additional imported feed contracts, silage production, and culling of cows. Farmers now focus on fully feeding cows to achieve good mating performance and to bank as much production as they can before they are at risk of drought. Many farms are deferring non-essential items to autumn to align budgets with more accurate production and milk prices.

Input prices across farms remain high with international instability in markets causing importers to increase margins to cover the risk of market volatility and freight prices. Fertiliser price has increased dramatically, and many farmers are looking to substitute DAP and elemental sulphur products that have risen independently of urea, ammonium sulphate, and triple superphosphate imports. The +0.25% increase of the OCR on September 2^nd will increase interest rates for farms and fuel price continues to climb as supply disruptions continue in the Middle East.

 

Lachlan Paine, AgFirst

Positive sentiment across the sheep and beef sector has continued through winter and into spring, supported by strong red meat returns and improved farm profitability. Beef + Lamb New Zealand forecasts average Farm Profit Before Tax of approximately $267,200 per farm for 2026/27, down 20% on the record 2025/26 season but still well above the five-year average. Average lamb prices are forecast to ease by around 8%, while beef cattle prices are expected to decline approximately 4.5% from last season’s highs. Despite this moderation, tight global red meat supply and firm export demand are expected to keep farm-gate returns historically attractive.

Beef remains the strongest market signal. Tight United States cattle supply continues to support demand for imported lean beef, underpinning manufacturing schedules and store cattle values. Lamb remains supported by lower production in Europe and the United Kingdom, while broader market diversification has reduced reliance on China. Store markets have also remained buoyant following favourable winter feed conditions, although spring and summer feed availability is likely to have a greater influence on store values over the coming months.

El Niño conditions have strengthened considerably since mid-winter and are expected to intensify further, with Earth Sciences New Zealand indicating the event may reach the ‘very strong’ category during spring or early summer. The developing pattern favours more frequent westerly and south-westerly airflow, with below-normal rainfall most likely across northern and eastern parts of the North Island and wetter conditions favoured in the western South Island.

The practical priority is to retain flexibility. Feed budgets and trigger dates for trading stock should be reviewed early, with conservative pasture covers carried toward summer where possible. Focusing on the early spring warm conditions to ensure good lamb growth for early processing has been a common theme among farmers, along with summer crops to improve stock feed flexibility. Strong prime schedules may remain supported by export demand, but store cattle and lamb values could soften quickly if dry conditions prompt widespread destocking or reduce finisher demand. Ewes maintaining body condition going into autumn will be a high priority to ensure the following season’s performance.

Virtual collars are actively changing the NZ sheep & beef systems. Following the April launch of direct-to-satellite connectivity, approximately 500 New Zealand sheep & beef farms had joined Halter’s satellite solution by mid-July, including 185 farms using the new Beef Pro product, with pastoral analysis capabilities. Opportunities will develop from the technology leap, such as the Dairy Beef Opportunities program developing pathways to better utilise non-replacement dairy calves. One opportunity is the Silver Fern Farm/Fonterra collaboration which offers a premium for processed stock that meets the criteria.

The Parliamentary Commissioner for the Environment has called for a major review of the Emissions Trading Scheme, with particular focus on the role of forestry. The Commissioner recommends reconsidering whether forestry offsets should remain within the ETS and, while a wider review is undertaken, proposes a temporary moratorium on new forestry registrations, tighter rules to prevent production forests becoming de facto permanent forests, and restricting the permanent forest category to native afforestation on erosion prone and marginal land. The report also proposes exploring alternative mechanisms to support forestry outside the ETS, allowing greater control over the type, location and scale of afforestation. For farmers holding NZUs or considering forestry investment, these proposals increase longer term policy uncertainty and reinforce the importance of considering ETS exposure alongside farm system, land use and tax planning.

 

Travis Carter, AgFirst

Overall sector position

Horticulture remains one of New Zealand’s strongest primary sectors, with export revenue forecast to reach a record $9.5 billion, up 7.0% on last year. This growth is being led by kiwifruit and apples. Strong international demand continues to support prices and market access; however, elevated freight, fuel, labour and compliance costs continue to pressure grower margins. Industry sentiment remains generally positive, although investment decisions are becoming more disciplined and return focused.

 

Apples

The apple sector is on track for a record season, with export returns expected to exceed $1.3 billion, 5.5% up on last year. Strong offshore demand continues to outpace supply in several premium programmes, and by mid-September most exporters are in the final stages of their sales programmes. The India FTA represents a significant long-term growth opportunity and is expected to support future export diversification. Investment remains focused on premium club varieties, orchard redevelopment and productivity improvements.

 

Kiwifruit

The kiwifruit sector continues to demonstrate exceptional performance, with export revenue forecast at approximately $4.8 billion, 16% up on last year. The industry has successfully managed a record crop of 225 million trays, shifting operational focus from production to fruit quality, storage, shipping and market execution. Strong demand from North America and Europe is supporting returns despite increased competition from summer fruit in parts of Asia and a larger than expected crop. Grower confidence remains high, although quality performance remains a key watchpoint.

 

Viticulture

The wine sector remains under significant commercial pressure despite good vintage quality in many regions. Excess inventory, low grape prices and yield restrictions continue to constrain profitability. As a result, industry focus remains on cost management, vineyard rationalisation and cash preservation rather than expansion. Export demand has shown signs of improvement, with exports surging 13% in July to $182.7m, but this has not yet translated into broad-based confidence.

 

Weather and operating environment

Winter 2026 was New Zealand’s third warmest on record. Despite the warmer winter, there has been sufficient winter chill accumulation in Hawke’s Bay and Nelson, with average to good amounts when compared with previous seasons. Hawke’s Bay and Nelson businesses moved into winter focused on pruning, redevelopment, and analysis of pack-out and market performance, while dry conditions generally supported orchard work. Through September, October and November, growers will focus on the crucial flowering, pollination and fruit set windows, preparing chemical and hand-thinning plans to set the optimum crop load for 2027. The Bay of Plenty was not uniformly as dry as Hawke’s Bay, while local soil, drainage and previous adverse weather history continued to influence vine response and operational access. Strengthening El Niño conditions are expected to create a warmer and drier outlook for eastern growing regions, placing greater emphasis on efficient water management.

 

Dean Rainham, AgFirst

 

Information sources

• Horticulture New Zealand Annual Report 2025/26
• NZAPI News Release Jun 2026
• MPI Horticulture Outlook 2026
• Zespri Kiwiflier June-August 2026
• NZKGI Industry Performance Report 2026
• NIWA Winter Climate Summary 2026
• ANZ Business Outlook August 2026
• MFAT New Zealand-India FTA
• NZ Wine Export Statistics July 2026

Dairy farming in Northland comes with its own set of challenges, from a warmer and more variable climate to pasture species and persistence, feed decisions and the need to maintain profitable and resilient farm systems. The Northland Dairy Development Trust (NDDT) was established in 2006 with a clear purpose: to help Northland farmers access quality research that is relevant to the conditions they are farming in.

Northland AgFirst consultants Kim Robinson and Chris Boom are contracted by NDDT to develop and manage the research programmes, and share the results throughout the wider industry.

NDDT and AgFirst work closely with farmers and industry to identify the questions that matter on the ground, then design trials to provide practical answers. The Trust works alongside the Northland Agricultural Research Farm (NARF), a farmer-owned research facility that has been hosting dairy research for over a century. NARF provides the opportunity to test different farm systems at a scale that allows meaningful comparisons between production, profitability, pasture performance, environmental outcomes and people requirements.

A key strength of NDDT is its focus on research that reflects the realities of Northland farms. Past projects have looked at topics including supplementary feeding, kikuyu management, mastitis, endophytes, pasture persistence and greenhouse gas emissions. Many of the findings are relevant to other areas of the country. For example, the supplement feeding trial identified the marginal cost of milk produced from supplements, which is applicable to farmers around the country.

Another important part of NDDT’s approach is making the research accessible to farmers. Farmers and industry members are encouraged to attend regular meetings and farm walks, where they can see the trials and discuss the management and results. This creates an important link between research and day-to-day farm management. Overseas visitors are hosted regularly and insights from different countries are shared. This has been integral in looking for pasture varieties that will perform in future climates and has led to the Trust importing improved kikuyu cultivars from Australia.

The farmer involvement is a big part of what makes the work valuable. The research questions are grounded in real farming challenges, while the results provide data that can help farmers consider what might work in their own system.

NDDT’s current research continues that focus. The Extended Lactation Trial, which began in June 2026, compares three different calving systems, including a conventional spring-calving baseline and two extended-lactation systems where half of the herd calves each year and cows milk for 2 seasons. One of the extended-lactation systems is also once-a-day milking for the full season. The trial looks at production, labour savings, non-replacement calf numbers and profit, providing a broader picture of what these alternative systems could mean for farmers and the industry. Chris and Kim put out fortnightly updates via email, Facebook and the NDDT website throughout the season. They also hold two large field days each year.

The value of NDDT’s work is in its practical approach. It is about asking questions that matter to farmers, testing different approaches under Northland conditions and sharing the financial results so farmers can make better-informed decisions. For a region facing climatic change, economic pressures and increasing expectations around environmental performance, having locally relevant, farmer-connected research is an important resource.

For further information contact AgFirst Consultants Kim Robinson or Chris Boom

 

Kim Robinson, AgFirst

It has been a while since the mood on farm felt this good heading into spring, but what struck me reading this quarter’s update is how quickly the conversation has already moved on to summer. James’s advice to farmers is to make the most of the conditions while setting clear trigger points for a dry season. I think marketers should borrow that thinking almost word for word. Farmers are shaping their spend right now while the grass is growing, with a lot of them holding anything non essential back until autumn when they have a clearer picture of production and milk price. That changes the shape of the buying year, which means it probably needs to change the shape of your marketing plan as well.

Get in front of the trigger points, not behind them

The idea I keep coming back to in this report is the trigger point. Farmers are effectively writing rules for themselves, along the lines of if rainfall drops below a certain level by a certain date, they will cull, buy in feed or plant summer crops. Every one of those rules is a buying moment waiting to happen. In marketing science these are known as category entry points, the situations that lead a farmer into a category in the first place. El Niño has opened up a whole new set of them, from feed contracts and brassica seed through to water storage and stock water systems.

The temptation is to wait for the drought to actually arrive before advertising into it, but by the time the trigger fires the farmer tends to buy whatever is already in their head and whatever the local store happens to have on the shelf. The brand that wins in January is the one being talked about in October while the plan is being written at the kitchen table. So it is worth sitting down now to map the trigger points that are relevant to your products, build your content around them and make sure your reps and retail partners in the at risk regions (the north and east of the North Island and the northeast of the South Island) are well stocked before the pressure comes on.

 

Do not go quiet just because spend has been deferred

With non essential spend pushed out to autumn, hard sell activity in discretionary categories is likely to feel a bit flat through spring and summer. The natural response is to trim the budget and wait it out, but in my experience that is usually the wrong call. Brand memory fades faster than people expect, so any competitor who stays visible while you sit on the sidelines picks up share that is expensive to win back later. A better approach is to hold a steady, broad reach brand presence through the deferral period so you are the name that comes to mind when autumn budgets are released, then concentrate your sales activation into that window. The timing is unusually clear this year, so it is worth planning for it now.

One caveat worth mentioning. The sectors are not all moving in the same direction. Kiwifruit and apples are having a record year, dairy is heading towards $10, sheep and beef is still strong but around 20% off last year’s peak, while wine is very much in cash preservation mode. A single national message is going to land well in one sector and badly in another, so segment by sector before you segment by anything else.

 

AgTech has moved on to the second question

The other shift that stood out is how farmers are talking about technology. They are no longer asking what it is. They are asking how it fits with what they already run, what the real return looks like and whether their connectivity and team can actually support it. The report also points to how quickly adoption moves once the neighbours are using something, with virtual fencing now actively changing sheep and beef systems across the country. That pace is a good reminder that peer proof does more of the selling in this space than any product page. It is worth noticing why the Northland Dairy Development Trust’s research lands so well with Northland farmers. It is designed with them, tested on a farmer owned farm and shown at field days rather than in a brochure. The lesson for agtech marketers is much the same. Lead with named farmers, real numbers and a clear picture of how the system fits an existing operation. If your marketing is still explaining features, you are probably answering last year’s question.

 

Kurt Sandtmann, Managing Partner, Tracta