Milk production up 4% but slowing

However the rate of growth has continued to slow, mainly driven by reduced South Island production growth, Fonterra says in its latest Global Dairy Update.

North Island collection in December was 4% higher than December last season. Some rain in dairy regions in the North Island supported grass growth and increased production.

South Island collection in December was 1% higher than the same month the previous season.

"Growing conditions have improved in Southland after a cold start to the season. However, dry conditions are impacting pasture growth across the east coast of the South Island and farmers will be watching this closely as irrigation restrictions may be put in place," the update says.

Fonterra's milk collection in Australia for the six months to December 31 reached 71 million kgMS, 6% higher than the same period last season. However in December it was 3% lower than December in the last season. Dry conditions are impacting pasture growth across most of south east Australia.