Australia's Dairy Industry Overview

Australia's dairy sector is a fundamental component of the country's agricultural landscape, producing approximately 8.8 billion liters of milk each year. The dairy cattle herd numbers around 1.43 million, supporting a robust milk processing industry that handles about 9.1 billion liters annually.

Milk Processing and Cheese Production

Cheese production is a significant aspect of Australia's dairy industry, with a current output of 365,000 tons and projections to increase to 435,000 tons by 2024. Additionally, the country produces 300,000 tons of milk powder and whey annually, showcasing its capacity in dairy processing.

Key Market Players and Export Activities

Major corporations such as Saputo Inc., Coles Group Limited, and Yili play pivotal roles in the industry. Australian dairy exports have reached a record value of $3.44 billion, with plans to expand into the Chinese market by 2025. Australia is a primary supplier to countries like Indonesia, competing with New Zealand, the United States, and Belgium.

Recent Industry Developments

Coles has reduced cheese prices to enhance accessibility, while Victoria leads in genetic research for heat-tolerant cattle. The Bega Group is innovating with protein-rich products and pursuing carbon neutrality, and Bubs Australia Limited is making strides in the infant nutrition sector.

Regional Focus: Tasmania and Victoria

Tasmania, managed by Laguna Bay, hosts 14,000 cows but faces challenges like declining production and factory closures. In contrast, Victoria is committed to sustainable supply chain practices, with Kennagri Farms adopting a robotic dairy system.

Resilience and Sustainability Initiatives

Programs to enhance farm resilience against droughts are underway, with South Australia pioneering virtual fencing. Investments in Western Australia support sector expansion, despite rising costs and declining milk production exacerbated by severe droughts in South Australia.

Trends in Consumption

Consumer preferences are shifting toward plant-based milk options, prompting initiatives like Saputo Dairy Australia's biogas project to mitigate environmental impacts. The integration of beef-on-dairy systems offers new income streams for farmers.

Industry Outlook

Forecasts predict a 1.2% decline in national milk production by the 2026/27 season. However, improved seasonal conditions and robust farmgate milk prices are expected to support a 1.4% rise in milk production by 2026, reaching an estimated 8.6 million metric tons.

Noteworthy Achievements

The Rea family of Allansford in southwest Victoria has celebrated over 140 years of continuous milk supply to their local processing plant. Northview Estate was awarded the 2026 Tasmanian Dairy Business of the Year, highlighting Tasmania's contribution to the sector.

Farmers' Concerns

Farmers from northern Victoria and the Riverina region have expressed concerns about the Murray-Darling Basin Plan's water buybacks, presenting their case to state parliament in Melbourne regarding the impact on local economies and food security.

Biosecurity Measures

A risk analysis by the Department of Agriculture, Fisheries and Forestry and Dairy Australia assessed the likelihood of the H5 bird flu virus spreading to commercial dairy herds as minimal, thanks to Australia's unique geography and biosecurity protocols.

Innovation Initiatives

Elevate Dairy is launching an innovation program in Victoria, introducing seven AgTech solutions to address operational challenges. Virtual fencing technology is gaining traction in South Australia, providing enhanced control and safety for farmers.

International Market Performance

China, North Asia, and Oceania have shown substantial double-digit growth in specialized nutrition and functional dairy formats. Australia's leadership in international dairy export growth continues to be a noteworthy aspect of its market performance.

Guidance for Dairy Farmers

Agriculture Victoria has released guidance to aid dairy farmers in managing seasonal uncertainties, focusing on resilience against drought and climate changes.

Industry Events

Foodpro 2026 in Melbourne featured Tetra Pak's latest end-to-end processing and packaging technologies. Meanwhile, the U.S. is investigating lamb imports from New Zealand and Australia, which could affect Australian exports.

Notable Entrepreneurs

Monica Cavarsan, founder of Lard Ass Butter in Ocean Grove, has turned her passion for cultured butter into a successful enterprise, complete with a dedicated butter tasting room.

Conference Focus

The WAFarmers 2026 Dairy Conference in Busselton addressed supply chain pressures, production costs, and environmental challenges, focusing on building a resilient Western Australian dairy industry.

Infrastructure Planning

Australian dairy businesses are shifting from short-term equipment decisions to infrastructure planning focusing on the next 15 to 20 years. Farmers are evaluating new parlors, extensions to existing facilities, and automation upgrades in response to labor constraints, aging equipment, and changing herd sizes.

Genetic Advancements

The latest Australian Breeding Values release places ABS Australia among the leading providers of proven Holstein sires, focusing on health, fertility, and productive life in breeding programs.

Bega Group's Operations and Manufacturing Changes

Bega Group closed the Strathmerton plant in Victoria, consolidated cheese cutting, packing, and processing at the Ridge Street facility in Bega, and commissioned an automated logistics hub at Laverton.

Shade River Dairy

Shade River Dairy operates in Western Australia, part of the peri-urban Serpentine River region. It uses benchmarking and advisory programs to improve efficiency and cost visibility.

A2 Milk Company

The a2 Milk Company, operating in Australia, disclosed transactions to the Australian Securities Exchange related to executives selling shares for tax payments.

Global Market Influence

Australia is a major international producer of dairy products. Sebastián Alconada referred to New Zealand and Australia as significant international producers whose output could affect global market conditions.

Production Trends

Production expanded in Australia. The August Global Dairy Update reported increased milk output in Australia during May, June, and July.

Pressure on Australia's Domestic Dairy-Manufacturing Base

Industry representatives cited higher energy tariffs, demanding regulatory and compliance requirements, increased labor costs, and competition from subsidized imported dairy products as challenges for processor profitability and regional processing centers.

Brindabella Earns Australia's Holstein Master Breeder Status

Jade and Georgia Sieben have received Holstein Australia’s Master Breeder distinction for their Brindabella herd. The Brindabella operation is located at Torrumbarry in Victoria, Australia.

Visa Policy Impact

A change to Australia's visa policy has delayed overseas recruitment for dairy farms. The disruption is affecting large herds as they enter the spring calving period.

Agile and Technologically Advanced Food Industries

Australia's food industries are described as agile and technologically advanced, highlighting the need to respond to consumer purchasing changes and advance sustainability efforts.

Danone's Operations

Danone’s facility in Victoria’s Kiewa Valley, Australia, manufactures YoPro yoghurt. The company has moved to acquire Made Group and has agreed to purchase the remaining 49% stake in its Australian fresh dairy joint venture with Saputo Dairy Australia.

Zanker and Dairy Education

Zanker, a former classroom teacher, has been named Australian Rural Woman of the Year for combining dairy production with farm-based education. Zanker operates a mixed farming and dairy enterprise covering 4,000 acres in Australia.

Oceania Cheese Index

The Oceania cheese index, which includes Australia, saw its lowest level since 2020 in July.

ProviCo's Achievements

Australian dairy-nutrition manufacturer ProviCo has won the Agribusiness, Food and Beverage category at the 2026 Governor of Victoria Export Awards.

Fremantle Seaweed and AgResults Initiative

Australian company Fremantle Seaweed has secured a license to supply the Reef4Beef feed additive to dairy producers and cattle feedlots across Australia as part of the AgResults initiative.

The Haggerty Dairy Operation

The Haggerty dairy operation near Capel ranks among Australia’s top 5% on the Balanced Performance Index. Mark and Dorothy Haggerty have operated a commercial dairy business in Capel, in southwest Western Australia, for almost 50 years.

Technological Advancements in Milking Systems

Australian family-run dairy farms are installing automated milking systems amid persistent difficulties in finding reliable, skilled agricultural workers.

Use of Almond Hulls in Dairy Feed

The almond hulls and shells used in the trials are sourced from almond orchards and processing plants owned by Olam in Victoria, Australia. Australian dairy farmers have used almond hulls as a fiber source in pasture-based systems.

Australian Dairy Farmers Criticism

Australian Dairy Farmers criticize Woolworths for imported US dairy products. ADF argues that imported dairy products from the United States reduce demand for Australian milk solids and affect domestic processing and employment.

Bubs Australia

Australian company Bubs Australia has received permanent FDA approval. Bubs has identified itself as the only Australian infant milk formula brand with permanent supply approval in the USA.

Nietschke Moppa Estate

Nietschke Moppa Estate in Australia runs a dairy operation alongside vineyards. The estate combines dairy farming and grape growing on one family property, which is a unique arrangement in the region.

Farm Improvement Initiatives

The farm operated by Chloe and Rodney Brown in Victoria has ranked 63rd in Australia for its herd’s Balanced Performance Index (BPI). The farm improved its results by transitioning from a mixed herd to Jerseys and introducing genomic testing. Its average BPI now stands at 45.

Western Star Butter

Western Star butter has reached its 100th anniversary after being established in Victoria’s Western District in 1926. The brand remains the market leader in Australia’s chilled spreads category. The products are currently available through Woolworths stores across Australia. Saputo Dairy Australia plans further distribution through Coles and independent grocery retailers in Australia.

Additional Market Dynamics

Major Australian supermarket chains have reduced prices for store-brand fresh milk. Australia has seen a recovery in its raw-milk supply, with national deliveries reaching 8.65 billion liters in 2025-26. Australia restricts industrial hemp as stock feed, though the matter is under review. In 2026, an Australian Senate committee recommended examining changes affecting the industry, including possible animal-feed uses.

Chobani's Market Expansion

Chobani has expanded its Australian manufacturing operations into liquid milk with a range of high-protein flavored milk drinks. The company targets a domestic milk-based drinks category valued at $1.2 billion. Australia is a major participant in international dairy supply. The results were reported during the seasonal milk-collection period in Oceania, highlighting Australia's role in affecting the volume available for processing into powders, butter, and other ingredients.

Arla's Expansion

Arla has expanded its international cottage cheese business through the acquisition of Australian producer Brancourts earlier this year. Australian retail turnover reached $39.36 billion in August, up 5.3% from a year earlier and 0.5% from July. Food sales rose 4.1% annually to $15.63 billion, while dairy price inflation eased from the previous month. The Reserve Bank of Australia raised its official cash-rate target to 4.6%.

Persistent rain has caused flooding, storm damage and six flood rescues across parts of Victoria. Rain continued across central and eastern Victoria after storms brought down trees, interrupted electricity supplies, damaged buildings and prompted six rescues.

Queensland Drought

A severe drought reduced the dairy herd of Libby Rough and her family near Kenilworth, Queensland, after pasture became scarce and feed costs rose.