New Zealand dairy cooperative Fonterra has confirmed that poor spring and summer weather has had a significant impact on milk production with the company collecting 5% less milk than expected halfway through the season.

Chief operating officer Jay Waldvogel said the cooler weather was affecting milk flows throughout New Zealand and even a dramatic improvement in the weather would make it unlikely the lost production could be made up over the entire season, which ends in May 2005.

"We will typically see different dairying areas performing better or worse in any given year. But it has been some time since we have experienced such widespread poor weather conditions," he said, adding that the drop in milk collection meant Fonterra would be manufacturing up to 75,000 tonnes less dairy products this season.

"That is a significant shortfall given Fonterra's share of globally traded dairy products and will add to the already tight international supply situation. We are effectively sold up for the current production season and we do not anticipate any dramatic increases in global supply until the new Oceania production season starts in September 2005," Waldvogel said.

Fonterra is attempting to balance the shortfall by supplying product from the United States, South America, Australia and Europe where it has dairy ingredient supply partnerships.

"As a result of our global sourcing strategy, we will be able to meet existing customer commitments for the remainder of the season," Waldvogel said.