"Recalcitrant" farmers who refuse to comply with measures to keep waterways clean are risking New Zealand's image and will face tough penalties, government ministers said today.

Speaking at the Dairying and Clean Streams Accord Snapshot of Progress 2007-2008 report launch, Environment Minister Nick Smith, Rural Minister David Carter and other speakers all condemned farmers who were not doing their bit.

The accord, in operation since 2003, set a zero non-compliance target for not breaking dairy effluent discharge laws.

Dr Smith said offenders would be hit with increased fines under the amended Resource Management Act and Fonterra recently announced penalties it would take off payouts.

The report found the "major" area of concern was dairy effluent compliance.

Nationally the level of significant non-compliance fell marginally from 12 per cent in 2006-07 to 11 per cent in 2007-08.

"This is an unacceptable result given that full compliance is a regulatory requirement," the report said.

Key findings were:

* Progress was made to meeting the accord's targets; 56 per cent of waterways of Fonterra suppliers (excluding Taranaki) met the accord and cattle were excluded from waterways on 78 per cent of those farms.

* Compliance with dairy effluent rules varied widely across regions; overall compliance was up 2 percentage points to 70 per cent compared to the last season.

* The 11 per cent non-compliance happened despite Fonterra introducing measures to help poorly performing farmers.

* Regional councils would have to ensure compliance and enforcement regimes were effective.

* Nearly 99 per cent of Fonterra suppliers had a "nutrient budget" but that did not necessarily mean nutrient inputs and outputs were being effectively managed.