DairyNZ estimates the rapid onset of drought conditions will trim the incomes of North Island farmers by $64 million this month alone.
The Government has declared a state of drought in Northland and expects other regions, such as Waikato and Hawke's Bay, to follow.
Dairy NZ says milk production in Northland this month is about 20% lower than February last year and production in Waikato is about 15% down.
Productivity marketing manager Warren Twohey said the loss of production from drought, combined with lower milk prices, will be a significant drain on farming incomes.
Across the entire North Island, just for February, farmers will receive $114 million less milk revenue than February 2012.
Mr Twohey said the drought counts for a reduction of $64 million and lower milk prices for $50 million.
