The latest figures from the dairy industry show the South Island now accounts for nearly 40% of the country's milk production.
The industry good organisation, Dairy NZ, says over the past decade production in the South Island has more than doubled to 565 million kilos of milk solids a year, with 610 new dairy herds.
Chair John Luxton says last season's production is up more than 5.5% percent on the previous year.
He says the South Island economy is benefiting with the dairy gross revenue investing more than $1.5 billion in Canterbury last season, and $1.15 billion in Southland.
John Luxton says Dairy NZ is having to lift its investment and staffing numbers in the south, particularly following the recent earthquake in Canterbury, and the spring storms.
Meanwhile, Dairy NZ says after forecasting a loss, its overall financial result for the 2009/10 financial year was much improved, with a near $2.5 million profit.
Mr Luxton says some of those funds are committed towards a primary growth partnership deal with the Government which was announced in August.
The $170 million five-year initiative is being led by Fonterra and Dairy NZ, and will look to boost on-farm productivity and environmental sustainability, as well as research on consumer needs.