This article is concerned with the economics of a planned system of supplementary irrigation and pasture improvement on a typical Richmond Valley dairy farm. In developing the plan for the farm, consideration is, given to a range of assumptions concerning the farmer's resources of labour and machinery. Similarly, three different levels of production response are considered; these represent assumed variations in the managerial skills of farmers. Thus, with a typical initial farm production of 8.650 lb. butterfat, the gains assumed are: (1) an increase of 4,830 lb. butterfat under "good management"; (2) an increase of 6,040 lb. butterfat under "outstanding management"; and (3) an increase of 3,620 lb. butterfat under "average management". For each set of assumptions, on the production gain achieved and the resource situation of the typical farmer, a credit budget is developed for a ten-year period. With "good management", when the only major investment is the irrigation plant and when the farmer does not need to employ extra labour, income gains are sufficient to ensure rapid repayment of the overdraft. If, however, the farmer is older and finds it necessary to employ a youth, the "pay back period" is much longer than ten years and the plan is clearly not attractive, except as a means of financing the return of a son to the property. Again, if there is no need to employ extra labour, the income generated is sufficient to cover investment in a tractor and implements, as well as the irrigation plant, with a pay back period of ten years, or in a herringbone milkshed in the third year of development, with a pay back period of eleven years.