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

Primary content

Information on the production, sales, and trends for Australian manufactured milk powders.

Milk powder

Australian manufacturers produce a range of milk powders. The technology used in both the production and use of powders has seen the range of specifications available from Australian manufacturers expand in line with customers’ needs.

In the years up until the peak milk production season of 2001/02, the most obvious trend in local milk powder production was a steady increase in the share of whole milk powder (WMP) output. Since then, skim milk powder (SMP) production has become the predominant milk powder, now accounting for over 70% of milk powders produced in 2016/17.

The smaller milk production volumes in recent years and wider variety of markets has seen local dairy companies opportunistically changing their product mixes to take advantage of the relative movements in international dairy commodity prices. Differing market access arrangements also impact on the competitiveness of product pricing. For example, local producers will be at a competitive disadvantage where Australia may not have negotiated a Free Trade Agreement, but a competitive supplier country has already done so. This impacts on local production mixes because the bulk of Australia’s milk powder production volumes are sold into export markets.

Australian production of milk powders (tonnes)


2011/12 2012/13
 2013/14
2014/15
2015/16 
 2016/17 (p)
Skim milk powder 230,286  224,061   210,964 242,266
255,792
 222,109
Wholemilk powder* 140,424 108,838  126,322 96,840
66,125
 59,982

*includes infant powder
Source: Dairy manufacturers

Only a small proportion of Australia’s powder production is sold domestically, with local usage mainly as an ingredient in food manufacturing. Infant formula is a high-value product that has shown strong growth recently, both in Australian supermarket sales (in part due to the demand from the informal re-export trade), as well as through direct Australian exports.

Exported milk powder is often recombined into liquid milk products, particularly in tropical climates where fresh milk supplies are not readily available due to insufficient local production and/or limited development of cold chain distribution facilities. It is also used in bakery products (improving the volume and binding capacity of bread, and ensuring crisper pastry and biscuits), confectionery and milk chocolates, processed meats, ready-to-cook meals, baby foods, ice-cream, yoghurt, health foods and reduced-fat milks. Industrial grade powder is used for stockfeed.

The major export markets for Australian milk powders are concentrated in Asia, with almost 90% of SMP and WMP exports destined for the region in 2016/17.

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