ABARES’ Quarterly Outlook report forecasts Australian agriculture will exceed a farmgate value of $100bn by 30 June 2026, four years ahead of its initial prediction. The forecast is a jump of $1.9bn on the ABARES estimate from December’s Quarterly Outlook. Despite the lift, farmgate production is expected to dip to $95bn in 2026-27 as trade disruptions affect demand and below-average rainfall is forecasted. 

Australian milk production is expected to decline in 2025-26 and 2026-27, down by 2%  and 1%, respectively, as the dairy industry consolidates. Dairy cow numbers are expected to fall because there will be fewer dairy farms and some regions are facing dry conditions and high cattle prices, encouraging farmers to sell livestock. Despite improved milk yield per cow through better genetics and more supplementary feeding, a smaller national herd means the total milk pool will shrink. With less milk available for processing, dairy product output is projected to decline in both 2025-26 and 2026-27.

The Australian farmgate milk price is forecast to decline in 2026–27 from near record highs, falling 6% as lower dairy commodity export prices at the beginning of the financial year will impact prices offered by processors. In the current season (2025-26), the farmgate milk price is forecast to rise by 3%, driven by rising processor competition. In real terms, the 2025-26 farmgate milk price is expected to be 9% above the 10–year average ending with 2024-25.