Australia's Dairy Industry Overview

Australia's dairy sector is an integral part of its agricultural landscape, with a notable dairy cattle herd of approximately 1.43 million. The industry produces an impressive annual milk output of 8.8 billion liters, highlighting its importance for both domestic consumption and international trade.

Milk Processing and Cheese Production

Australia has a robust dairy processing capacity, handling 9.1 billion liters annually. Cheese production is a significant element, with current outputs at 365,000 tons, projected to increase to 435,000 tons by 2024. Additionally, the country produces 300,000 tons of milk powder and whey each year.

Key Market Players and Export Activities

Major corporations such as Saputo Inc., Coles Group Limited, and Yili play critical 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 serves as a primary supplier to countries like Indonesia, alongside New Zealand, the United States, and Belgium.

Recent Industry Developments

Despite challenges like labor shortages and legal disputes, the industry continues to progress. Coles has initiated a reduction in cheese prices to enhance accessibility. Victoria leads in genetic research for heat-tolerant cattle. The Bega Group is innovating with protein-rich products and pursuing carbon neutrality, while the infant nutrition sector sees advancements from companies like Bubs Australia Limited.

Regional Focus: Tasmania and Victoria

Tasmania, managed by Laguna Bay with 14,000 cows, faces challenges such as declining production and factory closures. Conversely, Victoria remains committed to sustainable supply chain practices, with Kennagri Farms transitioning to a robotic dairy system.

Resilience and Sustainability Initiatives

Programs are in place to enhance farm resilience against droughts, with South Australia pioneering virtual fencing. Investments in Western Australia support sector expansion. Rising costs and declining milk production present challenges, compounded by climate issues like severe droughts in South Australia.

Trends in Consumption

Consumer preferences are shifting towards 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 avenues for farmers.

Industry Outlook

Forecasts indicate a 1.2% decline in national milk production by the 2026/27 season. However, improved seasonal conditions and strong 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 role in 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 its impact on local economies and food security.

Corporate Changes

Noumi Limited was suspended from the Australian Securities Exchange (ASX) in 2020 due to an accounting scandal. The company's rebranding from Freedom Foods reflects ongoing corporate evolution within the industry.

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, due 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 help dairy farmers manage 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 transformed her passion for cultured butter into a successful business, 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.

Safety Protocols

An accident in Tasmania's dairy sector highlights the importance of maintaining robust safety protocols in agricultural operations. Australia recorded a 5.4% increase in collections in May, indicating a notable expansion in milk supply.

Infrastructure Planning

Australian dairy businesses are shifting from short-term equipment decisions to infrastructure planning focused on the next 15 to 20 years. Farmers are assessing new parlours, extensions to existing facilities, and automation upgrades in response to labour constraints, ageing equipment, and changing herd sizes.

Woolworths Strategy

Woolworths will withdraw its Farmers’ Own milk brand from Australian stores by mid-2027. The product has already disappeared from South Australian shelves, with other states scheduled to follow. Dairy producers were recognized at the South Australian Dairy Awards. The South Australian Dairyfarmers’ Association celebrated its 90th anniversary and awarded producers for automation, genomic breeding, processor partnerships, and resource management.

Genetic Advancements

The latest Australian Breeding Values release places ABS Australia among the leading providers of proven Holstein sires. Australia is focusing on health, fertility, and productive life in their breeding programs. ABS Australia secured seven of the 14 highest positions among Australian proven Holstein sires. Australia is one of the countries providing genetic material for the Jersey herd. The 'Jerseyland' registered herd at Fazenda Limoeiro uses genetic material from Australia. DataGene’s August evaluation of Australian Breeding Values ranked Stuart Tracy’s Holstein herd in Waratah Bay, Victoria, first in Australia for Health Weighted Index (HWI) with an average score of 342. The Parish family’s Jersey herd in Bambra, in south-west Victoria, reached third place nationally for Balanced Performance Index (BPI), at 210, and second place for HWI, at 152.

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. The operations involved aligning global dairy commodity values with Australian farmgate milk prices.

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. GEA Farm Technologies has introduced CowScout Cloud in Australia, available across the country's pasture and hybrid dairy sectors.

Western Australia's Brownes Dairy has entered a formal sale process. Brownes Dairy operates two manufacturing locations in Western Australia, collecting about 150 million liters of raw milk each year from more than 50 contracted farms in the state's South West dairy region.

Modified: 2026/08/25