Australia: A Key Player in the Global Dairy Industry

Australia boasts a sophisticated dairy industry, contributing significantly to global supply chains. The country's strategic positioning and robust production capacity make it a formidable competitor on the international stage.

Dairy Cattle and Milk Production

Australia is home to approximately 1.43 million dairy cattle, contributing to an impressive annual milk production of around 8.8 billion liters. This substantial production supports both domestic consumption and a strong export market.

Milk Processing and Cheese Production

With facilities capable of processing about 9.1 billion liters of milk annually, Australia's dairy capabilities are a testament to its industrial strengths. Cheese production is a vital sector, with an annual output of approximately 365,000 tons. Projections suggest this could rise to 435,000 tons by 2024.

Milk Powder and Whey Production

The country produces approximately 300,000 tons of milk powder and whey, catering to high international demand, especially in markets like the U.S., EU, China, and Southeast Asia.

Key Market Players

Major market influencers include Saputo Inc., Coles Group Limited, Beston Global Food Co., and Yili. These entities lead significant industry advancements and contribute to market dynamics.

Dairy Plants and Farms

Notable processing facilities are managed by companies such as Saputo, Coles Group Limited, and Beston Global Food Co. Although there is a gradual reduction in the number of dairy farms, nearly 4,000 remain operational across the country.

Export and Import Statistics

Australia positions itself as an export-oriented dairy producer. Major exports include milk powder, cheese, and whey, predominantly sent to the U.S., EU, China, and Southeast Asia. Imports focus mainly on butter for local needs.

Recent Industry Events

• Saputo Inc. sold two processing plants to Coles Group Limited.
• Beston Global Food Co. explored divestments to alleviate financial stress.
• Coles reduced cheese prices to boost consumer access.
• A proposal from New Zealand was denied at an FSANZ meeting.
• Saputo ceased operations at King Island Dairy, impacting 58 employees.
• Beston Global Food entered administration, affecting 159 employees and 22 farmers.
• Pure Dairy launched a new facility in Dandenong South and allied with Great Lakes Cheese.
• Retailers cut store-brand milk prices after price disputes.

Current Market Trends and Challenges

The market is witnessing a shift to premium dairy products, although cheese production is projected to fall by 5% in 2023/2024. Skim milk powder and butter production are on the rise. Labor disputes, like the one at Saputo's Burnie plant, illustrate ongoing operational challenges.

International Relations

Competing in global markets, especially in Indonesia, Australia navigates complex international relations and legal disputes, such as Fonterra's case against Bega.

Industry Shifts

Ranking third in domestic agricultural markets, the sector faces challenges, including the closure of processing plants. However, consumer demand is robust, fueled by competitive pricing.

Rabobank's Outlook and Government Support

Rabobank's "A Period of Prosperity" report highlights milk supply growth from exporters like Australia. The government has designated $18 million to support South Australian farmers in drought resilience efforts.

Conclusion

Despite challenges like closures due to cost pressures, opportunities abound through innovation and strategic alliances. Industry events, such as the Australian Dairy Conference 2025, provide platforms for discussion and advancement. Noteworthy is the anticipation of improved margins from strong commodity returns and advantageous currency conditions through 2025. Imports from Australia will face a 10% tariff. Australian dairy farmers are expressing dissatisfaction over the recent increments in farmgate milk prices, arguing that the adjustments fall short of reflecting the current market conditions.

Modified: 2025/04/04

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