Information regarding milk production in Australia, the challenges facing dairy farm…
The Australian dairy processing sector is diverse and includes national and multinational companies, both privately owned and publicly listed.
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 cooperatives no longer dominate the Australian industry. Large multinational companies have operated in the Australian dairy industry for many years and currently include Fonterra (New Zealand), Lactalis of France (Parmalat) and Saputo of Canada (Warrnambool Cheese and Butter Factory and Saputo Dairy Australia).
The decline in total milk production over the past two decades has 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.
About 41% of manufactured product was exported and the remaining 59% sold on the Australian market in 2019–20. This contrasts with drinking milk, where most was consumed in the domestic market.
Cheese is consistently the major product stream, accounting for 39% of Australia’s milk production. Recent increases in cheese production capacity suggest 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 32% and 22% of Australian milk, respectively.
As Australia’s milk pool contracted during the first half of 2019/20, incremental consolidation in processing capacity also continued. In August, Nestle announced plans to close its Tongala factory in Victoria, which primarily produces tinned milk products. Fonterra Australia sold their Dennington factory in southwest Victoria in early 2020 to ProviCo, a company specialising in animal nutrition.
In addition to these consolidations, some major manufacturing developments also took place during the year. In October, Saputo Dairy Australia’s bid to acquire Lion Dairy & Drinks speciality cheese brand and production facilities was approved. Beston Global Food Company announced plans to invest in a major expansion of its lactoferrin production, through a refurbishment of its whey based plant in Jervois, South Australia. Furthermore, the new Dairy Mandatory Code of Conduct came into effect on the 1st of January, prescribing the introduction of minimum pricing announcements occurring on the 1st of June each year.