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

The Australian dairy manufacturing sector is diverse and includes farmer-owned co-operatives and multinational companies, both privately owned and publicly listed. Farmer-owned cooperatives no longer dominate the industry and now account for less than 40% of Australia’s milk production. The lack of growth in milk production over the past decade or so 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, while others have upgraded or increased capacity at remaining sites.

The milk processing sector has undergone significant changes in the past 12 months, with a number of long-term investment decisions being made or otherwise changed. Murray Goulburn has announced the closure of three plants in Kiewa, Rochester and Edith Creek, as well as its intention to sell the mothballed Leitchville cheese factory. Fonterra’s newly rebuilt Stanhope cheese factory is expected to come fully online in the first half of the 2017/18 season, whilst Warrnambool Cheese and Butter Factory have upgraded their Allansford factory, adding another 25,000 tonnes of cheese capacity. Meanwhile, a new player has emerged in southeast South Australia, with Union Dairy Company’s new milk powder plant set to begin production this season. 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).

Around 51% of manufactured product (in milk equivalent terms) was exported and the remaining 49% sold on the Australian market in the 2016/17 season. This contrasts with drinking milk, where over 90% was consumed in the domestic market.

Cheese is consistently the major product stream, accounting for a third of Australia’s milk production in 2016/17- 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 26% of Australian milk.

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