Dairy's turning point: What Fonterra’s cautious approach means for farmers

At Fieldays 2025, Fonterra chair Peter McBride addressed the topic of milk production increases with caution. While acknowledging a growing global demand for high-quality protein, McBride emphasised that any increase in milk volumes must be carefully managed to avoid long-term environmental and market risks.

The context: A world short on quality protein

McBride pointed to a global shortage of high-quality protein as a supply issue, not just a demand opportunity. He noted that this shortage isn't a call for unlimited growth but rather a challenge that requires New Zealand’s dairy sector to respond with balance, care, and sustainability.

“Growth in volume for volume’s sake is not a sustainable strategy,” McBride said. “We need to consider the environmental cost, emissions profile, and resource intensity of any increase in milk production.”

Strategic balance: Value over volume

This cautious tone is consistent with Fonterra's current strategic focus. Rather than chasing higher volumes, the cooperative is doubling down on high-value nutrition products, foodservice, and specialised ingredients. Fonterra recently lifted its annual earnings forecast and announced a competitive opening Farmgate Milk Price of NZD $10/kgMS—reflecting strong international demand without encouraging unrestrained volume increases.

McBride reinforced that Fonterra’s path forward will prioritise quality, long-term profitability, and sustainable operations.

What this means for farmers

For New Zealand farmers, this message signals a shift. Future incentives may be more aligned with environmental performance and product quality rather than output alone. As expectations increase for lower emissions and smarter land use, farmers who align with these goals will be better positioned to thrive in the evolving dairy landscape.

GrowPay sees this as a turning point—where the dairy industry moves from quantity-based growth to quality-driven sustainability. With this shift, farmers will require flexible financial tools and lending options that reward long-term planning and investment in infrastructure, technology, and environmental best practices.

GrowPay's role in a changing dairy economy

GrowPay supports this transformation by offering tailored lending solutions for farmers seeking to modernise and adapt. Whether you're investing in efficient irrigation systems, upgrading to low-emission machinery, or transitioning to regenerative farming methods, GrowPay provides the capital to match your goals.

We understand that success today requires more than just production—it demands resilience, adaptability and a strong financial partner.

About GrowPay

GrowPay is New Zealand’s dedicated agrifinance platform, helping rural enterprises unlock the value of their operations through smart lending, digital payments, and tailored financial solutions.