Dairy farmers may be in line for some big milk payouts this season.
But they are also concerned about keeping the lid on escalating costs.
Dairy New Zealand chair John Luxton says the cost of producing the milk was one of the issues raised at the industry body's AGM in Hawera on Thursday.
He says there is a lot of optimism in the industry, but concerns were raised that cost structures tend to go up when the payouts go up, so it's important that farmers budget carefully and continue to control the costs so farming remains profitable for the sector.
Mr Luxton says the sector does have the flexibility to alter its cost structure when times get tight.
He says it's likely to be a year when any surplus that comes is used to reduce debt.
Mr Luxton says Dairy NZ's economic service is monitoring production costs for farmers and also provides advice through its extension and consultancy services.