The impending closure of Lactalis’s Longwarry processing plant has reignited dairy industry fears about consolidation.
Lactalis Australia has announced it will close the West Gippsland plant by early 2027, shifting production 20 minutes away to its Darnum facility.
While concerns centre on the immediate impact on staff and local towns, dairy industry leaders are also worried about the impact of consolidation.
Australian Dairy Farmers president Ben Bennett said the decision was first and foremost about people and the pain it would cause workers, their families and the local businesses that rely on the site.
While acknowledging it was a commercial decision by Lactalis, Mr Bennett said it was another reminder Australia’s dairy industry operates in an increasingly challenging environment.
During the ACCC’s assessment of Lactalis’s acquisition of Fonterra, ADF raised concerns about increasing consolidation across the dairy industry and the importance of maintaining strong competition and regional processing facilities.
Mr Bennett said in a statement the Longwarry closure “reinforces why competition and processing capacity matter”.
“Every factory that closes undermines dairy communities and makes the industry that little bit smaller,” he said.
“Governments cannot keep saying they support food security, sovereign manufacturing and stronger regional communities, while making it harder and more expensive to make food in this country.
“Rising energy prices, increasing regulation, growing compliance obligations, escalating input costs and trade settings that expose Australian producers to heavily subsidised imports are steadily eroding Australia’s dairy industry.”
Mr Bennett said the dairy industry needed governments to stop adding costs and start backing Australian dairy.
“We need policies that strengthen the competitiveness of Australia’s dairy industry before more communities feel the impact.
“Today it’s one factory, but this should concern every Australian who wants to keep seeing fresh Australian dairy products on supermarket shelves and in their fridges.”
United Dairyfarmers of Victoria president Bernie Free was also concerned about the impact on the local community and the impacts of consolidation.
“We want to see factories expand and get more milk, rather than consolidate milk into one factory,” he said.
“They’re only 20-30 minutes apart, so it makes sense if you own the company, but as far as the community goes, we want more competition, more milk and more factories.
“Most towns are struggling; we need more employment in all rural towns, not less.”
Local dairy farmer Evan Campbell said his main concern was for the impacted staff.
“When it was Lactalis and Fonterra they were separate companies with their own product mixes.
“Once Lactalis bought Fonterra, people started asking if they would close Longwarry. That was one of the concerns about the sale.”
Mr Campbell said the closure seemed inevitable after the purchase.
“They said Darnum was at 70 per cent capacity, Longwarry 40 per cent capacity, and it’s only 15km down the road. With rationalisation, it was likely to happen.”
Mr Campbell said as a local farmer he was concerned about the impact on the community.
“I hope staff get an opportunity to come across to the Darnum plant,” he said.
Mainland Farmers Council (formerly the Fonterra Australia Suppliers’ Council) chair and Westbury farmer Stuart Griffin said people understood the reasons behind the closure, but remained concerned about the impact on staff and the town.
“They have made a business decision to consolidate and most understand that,” Mr Griffin said.
“Darnum is a relatively new and quite a high-tech plant, and I assume the efficiencies are higher there, whereas Longwarry was an old site that had been renovated, and it was right inside the town boundaries and Lactalis.
“I don’t think anyone is overly surprised Lactalis is consolidating its assets, but at the same time, there are about 40 workers impacted by this.
“Hopefully, there are some redeployment opportunities for them.”
Mr Griffin said the impact would be much bigger on the towns than on the farming community.
“We won’t see any real change on-farm,” he said.
He said while farmers wanted factories in regional areas and the jobs that come with them and the connections with farmers, “we also want profitable processors, and if it means the processor is more profitable, some of that should flow back to farmers.”
Lactalis Australia CEO Mal Carseldine recognised the impact the decision would have on employees and their families, but said it reflected necessary steps to support the long-term competitiveness and sustainability of Lactalis’ Australian manufacturing network.
“We do not underestimate what this closure means for our Longwarry team and their families,” Mr Carseldine said.
“Our employees have contributed meaningfully to our company and the region, and they have our commitment to support them through this transition.”
The company has committed to comprehensive consultation and support for affected employees, including redeployment opportunities within the Lactalis network where available.
“Longwarry currently operates at approximately 40 per cent capacity, while Darnum operates at approximately 70 per cent capacity and has more modern infrastructure, ongoing investment and significant growth potential.
“This consolidation will improve efficiency and environmental outcomes, while maintaining dairy production in Victoria and Australia.”
Lactalis has invested more than A$100 million at Bendigo, is investing A$35 million at Lidcombe, and has committed more than $200 million to modernising manufacturing facilities across Australia through 2025-26.
“These investments reflect Lactalis’ long-term confidence in Australian dairy manufacturing and its continued commitment to local production, regional jobs and supply chain capability,” Mr Carseldine said.
Lactalis has confirmed there will be no disruption to product availability, quality, or existing milk supply contracts with dairy farmers.
“Lactalis remains deeply committed to Victoria,” Mr Carseldine said.