Australia's Dairy Industry Overview

Australia's dairy sector stands as a crucial element of its agricultural landscape. With a dairy cattle herd numbering approximately 1.43 million, the industry produces an impressive 8.8 billion liters of milk annually. This substantial output underscores the sector's importance for both domestic consumption and international trade.

Milk Processing and Cheese Production

The country demonstrates a strong capacity for dairy processing, managing 9.1 billion liters of milk each year. Cheese production is a significant component, with current outputs at 365,000 tons and a projected increase to 435,000 tons by 2024. Additionally, Australia produces 300,000 tons of milk powder and whey annually.

Key Market Players and Export Activities

Major corporations like Saputo Inc., Coles Group Limited, and Yili are pivotal to the industry. Australian dairy exports have achieved a record value of $3.44 billion, with plans to expand further into the Chinese market by 2025. The country is also a primary supplier to nations such as Indonesia, alongside competitors like New Zealand, the United States, and Belgium.

Recent Industry Developments

Despite challenges including labor shortages and legal disputes, the industry continues to advance. Coles has reduced cheese prices to boost accessibility, and Victoria leads in genetic research for heat-tolerant cattle. The Bega Group is innovating with protein-rich products and pursuing carbon neutrality, while companies like Bubs Australia Limited are making strides in the infant nutrition sector.

Regional Focus: Tasmania and Victoria

Tasmania, overseen by Laguna Bay with 14,000 cows, faces issues such as 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 are being implemented 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, exacerbated by climate issues like 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 reduce 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 voiced 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.

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, 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.

Safety Protocols

An accident in Tasmania's dairy sector underscores 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 evaluating new parlors, extensions to existing facilities, and automation upgrades in response to labor constraints, aging 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, and the South Australian Dairyfarmers’ Association celebrated its 90th anniversary, awarding 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, focusing on health, fertility, and productive life in breeding programs. ABS Australia secured seven of the 14 highest positions among Australian proven Holstein sires.

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.

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. The CPTPP includes New Zealand and Australia, as well as Canada, Chile, Japan, Mexico, Peru, the United Kingdom, and Vietnam.

Production Trends

Production expanded in Australia. The August Global Dairy Update reported increased milk output in Australia during May, June, and July. The supply increase coincided with continued support for milk-powder prices.

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 research program focuses on clover-rich pastures in southeastern Australia and operates across Tasmania and Victoria, exploring clover's potential to provide nitrogen through biological fixation rather than synthetic fertilizers. The initiative is also part of Australia’s National Dairy Forages R&D Strategy.

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 south-west Western Australia, for almost 50 years. Their West and Haggerty herd is ranked in the top 5% nationally on the Balanced Performance Index, or BPI.