Since the same period, non-compliance for dairy effluent systems on farms had dropped from 7 per cent to 5.8 per cent.
Dairy Companies Association of New Zealand executive director Kimberly Crewther said the two toughest remaining challenges were collecting nutrient management data and performance benchmarking and getting information on significant wetlands in regional council boundaries.
The report highlighted how collecting this information was proving "problematic" with all councils having different definitions and identification processes.
"We are also catching up with measuring compliance with environmental standards for new farm conversions," Ms Crewther said.
Dairy companies had identified 175 new dairy farm conversions since 2013, of which 29 per cent measured as complying with the standard by May 2015 and 81 per cent by last month.
Dr Rick Pridmore, DairyNZ's strategy and investment leader for sustainability, said the industry was now where it needed to be in terms of meeting its own targets for excluding stock from waterways, and this was being been done voluntarily.
"We are committed to farming responsibly and within environmental water quality and quantity limits, as these limits get agreed locally through community processes and the implementation of the National Policy Statement for Freshwater."
The Government's National Policy Statement for Freshwater Management, released in 2014, defines "bottom lines" around water quality and allowed councils to set limits.
A consultation document proposing changes to the statement is now attracting submissions.
Meanwhile, Forest and Bird responded to the progress report by pointing out its worries about compliance in some regions.
The report showed 21 per cent of 963 Northland farms monitored were significantly non-compliant, along with 19 per cent of the 168 Auckland farms that were monitored.
In some regions, Forest and Bird said, only a proportion of farmers were monitored -- in Waikato, home to a quarter of the country's dairy farms, 10 per cent of dairy farms were monitored and the non-compliance rate was recorded as at 3 per cent.
"We suspect the real rate of serious non-compliance in the Waikato is actually a lot higher than the stated figure," the group's campaigns and advocacy manager Kevin Hackwell said.
"Regional councils should be consistent in their monitoring and enforcement so New Zealanders can have confidence about the reliability of the figures, and that all dairy farm effluent is being managed properly to protect our water quality."
