Australian milk production in July dropped by 10.3% on the corresponding month in 2015, the latest figures from Dairy Australia show.
Milk production for the opening month of the 2016/2017 stood at 624.6m litres, a decline from the 696.6m litres produced in July 2015.
Tasmania, which produced just 4.27% of Australia's July milk, saw deliveries plummet 19.6% to just 26.6m litres.
The next highest drop in milk production for July came from South Australia with a drop in production of 18.8% to 32.7m litres.
Meanwhile, Australia's largest milk producing state, Victoria, recorded a drop of 11.2% to 408.1m litres.
Milk production also dropped in New South Wales (-7.2%) and Queensland (0.4%), while it rose marginally in Western Australia (+1.4%).
Australian milk production fell 2% in the 2015/2016 season compared to the 2014/2015 season, figures from Dairy Australia show.
Some 9,539 billion litres of milk were produced in Australia for the season just gone, down from the 9,731 billion litres produced for the previous season.
June milk production finished up down 8.8% year-on-year with 619.8m litres produced. The state of Victoria, which produces 64% of Australia’s milk, saw production for June fall by 9.1% with 398.7m litres produced.
The initial forecast for 2016/17 from Dairy Australia is for a further 1-2% fall in production, to between 9.45 and 9.55 billion litres.
The drop in milk production could be connected to milk price cuts from major processors Fonterra and Murray Goulburn.
Fonterra Australia advised its suppliers in July that it forecasts a closing farmgate milk price for the 2016/17 season of $5.00kg/MS, with an opening farmgate milk price of $4.75kg/MS.
Meanwhile, Murray Goulburn, set an opening farmgate milk price of AU$4.31/kgMS for 2016-17 for its farmer suppliers.