China Still Tops, but New Markets Emerge
Between July 2024 and March 2025, Australia exported over $710 million worth of dairy products to China (excluding Hong Kong), according to the latest figures from Dairy Australia. This figure, though still robust, marks a structural shift in Australia’s trade pattern: Southeast Asia and Japan are becoming increasingly central to the dairy export map.
Japan emerged as the second-largest export destination, absorbing $417 million in dairy products over the same nine-month period, followed by Indonesia with $255 million. Malaysia, Vietnam, Singapore, the Philippines, New Zealand, South Korea and Taiwan round out the top ten — a list now dominated by fast-growing Asian economies whose expanding middle classes are driving demand for protein-rich foods.
Diversifying Demand
“The diversification trend is becoming clearer year by year,” said Madelyn Irvine, a Dairy Australia analyst. “Season-to-date, overall export volumes are up 5.4%, with growth of 14% in Southeast Asia and 21% in Japan.”
China’s slowdown is not purely a matter of demand collapse. Domestic dairy production within China has grown steadily in recent years, while stockpiles amassed during the pandemic years — when milk powder was being acquired at an aggressive pace — are still being drawn down. Meanwhile, heightened competition from the United States, which has also turned to Southeast Asia and Australia as offload markets, has added downward pressure on prices.
Competitive Complexity
This evolving landscape presents both opportunities and risks for Australian dairy processors. Stewart Carson, chief executive of export-focused processor Burra Foods, recently spoke at Dairy Australia’s annual Situation and Outlook Forum. “It’s risky to balance out what the future holds,” he said. “As an ingredients business and exporter, we play on a global platform. The dynamics are constantly shifting.”
Carson noted that local milk production is slowing — a trend partly driven by climate variability and higher farm input costs. But for export-oriented businesses, the primary challenge remains price volatility and the ability to adapt to changing demand signals.
The Post-China Playbook
During the 2020–21 pandemic years, China's appetite for milk powder and dairy ingredients underpinned global price surges on the Global Dairy Trade index. However, prices softened in 2022 and fell sharply through 2023, eroding Australia's relative competitiveness — especially against New Zealand, which benefits from long-standing trade agreements and logistical advantages in Asian markets.
This new era calls for strategic agility. Australian dairy producers must navigate a marketplace that is both broader and more fragmented than in the China-centric years. Growth in emerging markets is welcome, but it brings new expectations: price sensitivity, demand for tailored products, and supply chain resilience.
The Bigger Picture
Australia’s dairy future is not necessarily smaller — but it is certainly more complex. The shift away from China dominance reflects both global dairy dynamics and Australia’s efforts to future-proof its trade strategy. As Irvine puts it: “The goal now is not just volume, but value, sustainability, and long-term partnerships.”
In that context, diversification isn’t just good risk management. It may be the key to enduring relevance in an increasingly competitive global dairy marketplace.
