Information regarding milk production in Australia, the challenges facing dairy farmers and an analysis of dairy milk supply trends.
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 48% of manufactured product 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 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, respectively.
In 2018–19 Australia's milk processing sector underwent considerable change through several long-term investment decisions, despite limited milk supplies and high farmgate pricing. Saputo Dairy Australia announced intentions to expand its operations in Australia by acquiring Lion Dairy & Drinks’ speciality cheese brand. Meanwhile, Freedom Foods' Shepparton, Victoria, plant began production of lactoferrin during the second half of 2018.
As competition for a smaller national milk pool intensified, consolidation in processing capacity also continued. In February 2019, Bega Cheese announced the closure of its cheese processing plant in Coburg, Victoria. In November 2019, Fonterra Australia closed its Dennington factory in south-west Victoria.