Budgeting, 50:50 sharemilkers (Te Aroha, Waikato)

What makes this farm successful

The sharemilkers combine scale with a straightforward System 2-3 approach. Pasture comes first, home grown maize and silage support the grazing system, and purchased feed is used tactically rather than allowing the system to become unnecessarily complex. Regular pasture walks, active management of the grazing round and a strong focus on days in milk help turn feed into milk efficiently.

Their pathway has not been linear. They progressed from farm assistant roles into contract milking, exited that business at approximately net zero, and rebuilt through reputation, work ethic and strong industry relationships. A former farm owner backed their move into sharemilking with a bank guarantee. Their long term goal is to own a productive 100 ha Waikato dairy farm while protecting family time and continuing to grow equity.

Key performance indicators

✓ 218,000 kgMS budgeted (382 kgMS/cow)	✓ 570 peak cows on 157 effective hectares
✓ 1,389 kgMS/ha and 3.63 cows/ha	✓ DairyNZ System 2-3
✓ 12.1 tDM/ha pasture and crop eaten	✓ 71% six-week in-calf rate in 25-26
✓ 86 kgN/ha purchased nitrogen surplus	✓ $2,148 forecast operating profit/ha

2026-2027 budget overview

The business receives 50% of milk income and budgets no dividend income. The 2026-2027 forecast is based on 218,000 kgMS.

Key spending priorities include:

Two paid FTE plus relief support, alongside unpaid labour and management input.
Home-grown maize and silage, with PKE and dry silage purchased tactically.
Animal health, breeding and reproductive performance.
Young-stock grazing with heifers returning around 10 June.
Reliable vehicles and machinery, with disciplined servicing and replacement.

Total farm working expenses are budgeted at $627,700, or $2.88/kgMS, leaving a cash operating surplus of $526,716. After labour and depreciation adjustments, forecast dairy operating expenses are $817,149 and forecast dairy operating profit is $337,267, or $1.55/kgMS. The forecast operating profit margin is 29.2%.

Te Aroha Budget Case Study Pie Chart 1200X800px

Farm performance snapshot

2026-2027 Financial KPI budget:

Net dairy cash income: $1,154,416 ($5.48/kgMS)
Total farm working expenses: $627,700 ($2.88/kgMS)
Cash operating surplus: $526,716 ($2.60/kgMS)
Total dairy operating expenses: $817,149 ($3.75/kgMS)
Dairy operating profit: $337,267 ($1.35/kgMS; $2,148/ha)

2025-2026 Physical KPI:

Pasture and crop eaten: 12.1 tDM/ha
Purchased nitrogen surplus: 86 kgN/ha
Biological methane emissions: 337 kgCH4/ha
Six-week in-calf rate: 71%
Not-in-calf rate: 14%
Average somatic cell count: 192,443 cells/ml

2026-2027 Forecast budget

The tables below retain the complete budget and the supporting copy intended for each expandable income and expense item on the webpage.

INCOME	$TOTAL	$/KgMS	$/COW	$/HA
Milksolids - advance 50% share. $803,400 is received on 206,000 kgMS paid from July to May, equivalent to an effective sharemilker advance rate of $3.90/kgMS on the milk paid.	803,400	3.90	1,409	5,117
Milksolids - retrospective Retrospective payments calculated on confirmed 2025-26 production of 226,697 kgMS.	175,690	0.77	293	1,119
Milksolids - dividend No share of dividend is budgeted.	0	0	0	0
Previous season - May milk May milk from the previous season received in the current budget year.	72,846	0.32	121	464
Net livestock sales Culls, surplus heifers and calves, net of purchases. Approximately 100 calves are reared.	102,480	0.47	180	653
NET DAIRY CASH INCOME	1,154,416	5.48	2,025	7,353

EXPENSES	$TOTAL	$/KgMS	$/COW	$/HA
Wages Two paid FTE plus relief over calving and during the season.	164,660	0.76	289	1,049
Animal health Teat seal, vaccination, minerals and treatment as required.	51,322	0.24	90	327
Breeding and herd improvement Replacement and mating programme, including nominated, crossbred and beef semen.	35,700	0.16	63	227
Farm dairy Rubberware, chemicals and normal dairy-shed costs.	12,522	0.06	22	80
Electricity Farm dairy and water-supply electricity.	37,722	0.17	66	240
Supplements made Home-grown maize and grass silage, including approximately 12 ha of maize and surplus pasture conserved as silage.	38,000	0.17	67	242
Supplements purchased PKE is generally contracted around Fieldays; dry silage may be purchased tactically for springers or shortages.	60,000	0.28	105	382
Calf rearing Approximately 100 calves reared by the sharemilkers, including meal and animal-health inputs.	13,000	0.06	23	83
Young and dry stock grazing Established grazier; young stock return as in-calf heifers around 10 June. Winter charges begin from early May.	70,000	0.32	123	446
Winter cow grazing Dry cows remain on the milking platform.	0	0	0	0
Support block lease No leased support-block cost is included.	0	0	0	0
Fertiliser incl. N Base fertiliser, nitrogen side-dressings, chicken manure and spreading. Applications target grazed and non-effluent areas.	50,000	0.23	88	318
Irrigation No irrigation cost budgeted.	0	0	0	0
Regrassing & cropping No separate cash cost budgeted; cropping inputs are included within the wider feed and fertiliser programme.	0	0.00	0	0
Weed and pest Allowance for weed control, including prickly pear.	500	0	1	3
Vehicles and fuel Fuel, servicing and operation of reliable machinery and farm vehicles.	50,000	0.23	88	318
Repairs and maintenance Land, buildings, plant and machinery. Equipment is replaced when repair or health-and-safety risk justifies it.	4,500	0.02	8	29
Freight and general farm expenses Freight and general farm operating costs.	8,0000	0.04	14	51
Administration GST and accounting support, Xero and Figured.	13,594	0.06	24	87
Insurance Farm-business insurance as budgeted.	12,680	0.06	22	81
ACC ACC as budgeted.	5,500	0.03	10	35
Rates No sharemilker rates cost budgeted.	0	0	0	0

BUDGET RESULT	$TOTAL	$/KgMS	$/COW	$/HA
Total farm working expenses	627,700	2.88	1,101	3,998
Cash operating surplus	526,716	2.60	924	3,355

Non cash adjustments and operating profit

The labour adjustment combines $41,600 of unpaid labour and $102,310 of unpaid management. Livestock change and feed inventory have been set to zero. Depreciation uses the latest reported value of $45,539.

	$TOTAL	$/KgMS	$/COW	$/HA
Value of change in dairy livestock	0	0	0	0
Labour adjustment	143,910	0.66	252	917
Feed inventory adjustment	0	0	0	0
Depreciation	45,539	0.21	80	290
DAIRY GROSS FARM REVENUE	1,154,416	5.48	2,025	7,353
DAIRY OPERATING EXPENSES	817,149	3.75	1,434	5,205
DAIRY OPERATING PROFIT	337,267	1.55	592	2,148

Download the complete forecast budget as a PDF

The labour adjustment combines $41,600 of unpaid labour and $102,310 of unpaid management. Livestock change and feed inventory have been set to zero. Depreciation uses the latest reported value of $45,539.

Five key drivers of success

Pasture and days in milk come first - Regular pasture walks, the spring rotation planner and active grazing round management underpin feed allocation. Home grown maize and silage support the system, while tactical supplements help extend lactation towards 31 May.

Keep the system simple and watch cashflow - The business avoids unnecessary complexity, monitors the details that affect profit and directs surplus cash towards debt reduction and equity growth. Feed and machinery decisions are made deliberately rather than automatically.

Protect reproduction and herd value - Younger cows can move to once a day milking from around mid September to protect body condition and reproductive performance. Crossbreeding maintains hybrid vigour, beef semen is used selectively and culling is timed to retain productive days in milk.

People and family time matter - Scale supports a team structure with two paid FTE, relief support and a 12 days on, two days off roster. Clear routines and three staff houses help provide labour flexibility while allowing the sharemilkers to prioritise family life.

Relationships create opportunity - The couple’s move into sharemilking was enabled by a strong reputation, a supportive network and an owner willing to guarantee their bank lending. They continue to treat trust, communication and reliability as business assets.

Behind the numbers

The business responds to feed, weather and financial pressure through practical actions that can be reviewed throughout the season.

Action	Why	Result
Regular pasture walks and grazing planning	Match feed supply and demand	12.1 tDM/ha pasture and crop eaten
Home-grown maize and silage plus tactical PKE	Fill genuine feed gaps without overcomplicating the system	Production supported through to late lactation
Once-a-day milking for younger cows when required	Protect body condition and reproductive performance	More flexibility without drying the group off early
Light culling through lactation	Retain productive cows and days in milk	Milk empty and cull cows while practical
Target fertiliser away from the effluent area	Improve fertility where the response is strongest	122 kgN/ha applied and 86 kgN/ha purchased surplus
Routine servicing and selective replacement	Limit downtime and manage health-and-safety risk	Reliable machinery without unnecessary capital spend
Young stock grazed off the milking platform	Protect platform feed and labour capacity	In-calf R2 heifers return around 10 June

Previous season reviews

2024-2025 season review

The 2024-25 profitability report records 226,920 kgMS from 574 peak cows on 157 ha, equal to 395 kgMS/cow. Gross farm revenue was $1,310,447 and total operating expenses were $815,486. Dairy operating profit reached $494,962, or $2.18/kgMS and $3,153/ha, giving an operating profit margin of 37.8%.

A $109,728 increase in dairy livestock value contributed to gross farm revenue. Labour input totalled 3.6 FTE: 2.0 paid FTE, 0.6 unpaid labour FTE and 1.0 unpaid management FTE. This equated to 159 cows per FTE.

2023-2024 season review

The 2023-24 report records 222,139 kgMS from 559 peak cows, equal to 397 kgMS/cow. Gross farm revenue was $925,860 and total operating expenses were $735,895. Dairy operating profit was $189,965, or $0.86/kgMS and $1,210/ha, giving an operating profit margin of 20.5%.

The comparison illustrates the effect that milk income, livestock-value movement and cost control can have on profit between seasons. It reinforces the sharemilkers’ focus on maintaining a simple system, monitoring cashflow and using stronger seasons to build equity and reduce debt.

Business development over time

Stage	What it built
Farm assistants	Built practical skills, work ethic and a strong reputation.
Contract milkers	Took on business responsibility but exited the contract at approximately net zero.
50:50 sharemilkers	Returned to a farm where they had previously worked, supported by the owner’s bank guarantee.
Next goal	Build equity towards ownership of a productive 100 ha Waikato dairy farm while protecting family time.

What could your farm take from this case study?

Is the farm system simple enough that the team can focus on the details that drive profit?
Are pasture, supplements and days in milk being managed together rather than as separate decisions?
Could stronger seasons be used more deliberately to reduce debt and build equity?
Does the labour structure support both farm performance and the family’s wider goals?

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Budgeting, 50:50 sharemilkers (Te Aroha, Waikato)

Near Te Aroha in the Waikato, this 50:50 sharemilking business milks 570 cows on a 157ha effective platform and budgets to produce 218,000 kgMS in 2026-27.

"Make milk and keep it simple. The aim is to build equity, reduce debt and create a profitable business that also leaves time for family."

What makes this farm successful

Key performance indicators

2026-2027 budget overview