Dairy Australia - Dairy information for Australian Dairy Farmers and the industry

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Our Production Summary provides you with recent information on trends and activity within the dairy manufacturing sector.

Production summary

There is a wide range of companies operating in the Australian dairy industry. This includes national and multinational companies, both privately owned and publicly listed. Farmer owned cooperative no longer dominate the Australian industry.

The decline in total milk production over the past two decades reduced the need for Australian dairy companies to invest in processing capacity, at least in the short to medium term. At the same time, the age of existing plants and the need to rationalise production has seen some processors close plants to reduce costs. Others have chosen to upgrade or increase capacity at remaining sites.

In 2018–19 the milk processing sector underwent considerable change. This has seen several long-term investment decisions being made or otherwise changed.  While limited milk supplies and high farmgate pricing slowed corporate investment over the year, some major developments occurred. Saputo Dairy Australia announced intentions to expand their operations in the Australian dairy industry by acquiring Lion Dairy & Drinks’ speciality cheese brand. This purchase remains subject to ACCC approval but is forecast to occur in 2019–20. Freedom Foods Shepparton plant, in Victoria, came online and began production of lactoferrin during the second half of the year. As competition for a smaller national milk pool intensified, incremental consolidation in processing capacity also continued. In February Bega Cheese announced the closure of their cheese processing plant in north Coburg, Victoria. In May, Fonterra Australia made the decision to close their Dennington factory, in south-west Victoria. The factory is forecast to cease all production during 2019–20. Large multinational companies have operated in the Australian dairy industry for many years and currently include Fonterra (New Zealand), Kirin of Japan (Lion Dairy and Drinks), Lactalis of France (Parmalat) and Saputo of Canada (Warrnambool Cheese and Butter Factory and Saputo Dairy Australia).

Around 48% of manufactured product (in milk equivalent terms) was exported and the remaining 52% sold on the Australian market in 2018–19. This contrasts with drinking milk, where most was consumed in the domestic market.

Cheese is consistently the major product stream, accounting for 38% of Australia’s milk production. Recent increases in cheese production capacity suggest that this will become the case even more so in the future. Drinking milk and skim milk powder/butter production were the two next largest users of milk, accounting for 28% and 21% of Australian milk.

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