Milk Powder

Australian manufacturers produce a range of milk powders, including skim milk powder (SMP) and whole milk powder (WMP).

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 customer needs.

SMP is very much the more dominant milk powder produced in Australia, accounting for close to 80% of milk powder production in 2018–19.

In recent years, dairy companies have had access to a smaller national milk pool and a wider variety of markets. As a result, companies have been more flexible with their product mixes to take advantage of relative movements in international commodity prices.

The bulk of Australia’s milk powders (92%) is sold into export markets. Differing market access arrangements – such as whether a Free Trade Agreement is in place or not – can have an impact on the competitiveness of product pricing.

Australian production of milk powders (tonnes)

Only about 5%–10% of Australia’s milk powder production is sold domestically, where it is used mainly as an ingredient in food manufacturing.

Infant formula is a high-value milk powder product that has shown considerable growth. This growth has been generated through Australian supermarket sales (partly due to the demand from informal re-export trades), as well as through direct exports.

Australia imported about 78 million tonnes of milk powders in 2018–19. Imports of milk powders have increased over the past few years, but dropped almost 5% this year. Most of the imported milk powder is sourced from New Zealand.

The major export markets for Australian milk powders are concentrated in Asia, where 90% of SMP and WMP exports were destined in 2018–19.

Exported milk powder is often recombined into liquid milk products, particularly in tropical climates where fresh milk supplies are not readily available. It is also used in bakery products to improve the volume and binding capacity of bread and ensure crisper pastry and biscuits.

Other products Australian milk powder is used in include 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.