West Coast dairy co-operative Westland Milk Products has seen its milk supply drop by more than 10% on a two-day average, as farmers cut back on milking in response to the rapidly drying conditions there.
Chief executive Rod Quin said it's expecting production to fall further, though this depends on whether there is any rain.
He said production had been forecast to have increased 3-5% by the end of the season but is now predicted to be below that of last season.
"That means simply that we will have less to sell, so whilst we won't cancel any contracts we won't be contracting up to the extent that we would have done even two weeks ago."
Farmers on the West Coast of the South Island say they'll be pushing for a drought declaration if they don't get rain this week.