Australia: A Key Player in the Global Dairy Industry

Australia's sophisticated dairy sector is integral to the global supply chain, with the country strategically positioned as a competitive force in international dairy markets. The nation's dairy industry is characterized by its robust production capabilities and significant export activities.

Dairy Cattle and Milk Production

Australia is home to approximately 1.43 million dairy cattle, contributing to an impressive annual milk production volume of around 8.8 billion liters. This level of output supports a strong domestic market and a thriving export sector.

Milk Processing and Cheese Production

The country boasts processing facilities capable of handling approximately 9.1 billion liters of milk annually. Cheese production is a substantial segment of this industry, with an annual output of about 365,000 tons, projected to increase to 435,000 tons by 2024.

Milk Powder and Whey Production

Australia meets high international demand by producing about 300,000 tons of milk powder and whey each year. Major markets for these products include the U.S., EU, China, and Southeast Asia.

Key Market Players

Prominent companies in the Australian dairy industry include Saputo Inc., Coles Group Limited, Beston Global Food Co., and Yili, which are at the forefront of industry advancements and market dynamics.

Export and Import Statistics

Australia is predominantly an export-oriented dairy producer, with key exports such as milk powder, cheese, and whey primarily targeting the U.S., EU, China, and Southeast Asia. Import activities mainly focus on butter to meet local demand.

Recent Industry Events

• Saputo Inc. sold two processing plants to Coles Group Limited.
• Beston Global Food Co. explored divestments to mitigate financial stress.
• Coles reduced cheese prices to improve consumer access.
• Saputo ceased operations at King Island Dairy, affecting 58 employees.
• Beston Global Food entered administration, impacting 159 employees and 22 farmers.
• Pure Dairy launched a new facility in Dandenong South and allied with Great Lakes Cheese.
• Retailers reduced store-brand milk prices following price disputes.

Current Market Trends and Challenges

There is a shift towards premium dairy products, despite a projected 5% drop in cheese production for 2023/2024. Conversely, skim milk powder and butter production are increasing. Labor issues, such as those at Saputo's Burnie plant, remain a challenge.

International Relations and Industry Shifts

Australia navigates complex international relations, particularly in Indonesia, and legal entanglements, such as Fonterra's case against Bega. The dairy sector, ranking third in domestic agricultural markets, faces challenges like processing plant closures. Despite this, consumer demand remains robust, supported by competitive pricing.

Rabobank's Outlook and Government Support

Rabobank's "A Period of Prosperity" report highlights Australian exporters' contributions to milk supply growth. Additionally, government support of $18 million is designated to aid South Australian farmers in drought resilience.

Conclusion

Despite challenges such as cost-induced closures, opportunities arise through innovation and strategic alliances. Industry events, like the Australian Dairy Conference 2025, provide platforms for discussion and advancement. Favorable commodity returns and currency conditions are expected to improve margins through 2025. However, Australian dairy farmers are dissatisfied with recent farmgate milk price increments, arguing they do not adequately reflect current market conditions.

Regional Focus: Victoria

Victoria, accounting for 63% of Australia's milk supply, faces a severe housing crisis impacting workforce attraction and retention. A new shipment of Holstein dairy cattle is scheduled to arrive in Mazatlán from Australia. Climate change drives Australian farmers to genetic advancements for heat-tolerant cattle. Victoria also moves to legalize virtual fencing for cattle, aligning with other states, supported by new regulations from the Victorian government.

Australia Week 2025 showcases more than 960 high-quality Australian products, highlighting Australia’s reputation for clean, green, and sustainable food production. The ANZ region is notable for its high per capita spending on sports nutrition products, with Australia being the third largest sports nutrition market globally.

Australia's dairy sector is sounding the alarm as natural disasters ravage farms across the nation. Natural disasters are threatening not only the livelihoods of producers but also the availability and affordability of essential staples like milk, butter, and cheese. More than 80% of the country’s milk producers are reportedly grappling with the fallout from extreme weather events.

Australia’s dairy farmers are on the brink due to catastrophic weather extremes. More than 40% of the country’s dairy producers are operating in regions affected by drought, including parts of South Australia, South West Victoria, Gippsland, and southern New South Wales. Northern NSW is grappling with the aftermath of a one-in-500-year flood.

Australia's dairy sector is showing clear signs of synchronized recovery. After years of sluggish domestic demand and inflationary headwinds, both volume and value in dairy consumption are rising in tandem in Australia. The dairy sector is witnessing a rare moment of optimism for producers and retailers alike.

Modified: 2025/05/18