Fonterra Australia has announced it will close its Dennington milk processing plant in November 2019. A declining milk pool, excess processing capacity and significant change were the main drivers, Fonterra said.
In a 23 May statement, Fonterra Australia managing director René Dedoncker said the decision was "difficult" but "a responsible decision for the long-term". The company bought the site in 2005.
The closure affects 98 employees and the company's immediate focus was on their wellbeing, Dedoncker said. "We know this is very tough for our people, and we will do the right thing by them," he says.
Derrington has been producing lower value products. "In this current operating environment, it's more important than ever that we put our farmer's milk into the highest returning products to endure we can run a sustainable business that is here for the long term," Dedoncker says.
It is a "responsible decision" that consolidates Fonterra's manufacturing in western Victoria and will make its three regional milk processing sites more efficient, he says.
Milk from Dennington will be processed at the Cobden plant. Its two Tasmanian factories and secondary processing plant at Bayswater gives Fonterra the "right asset footprint" with milk going into higher returning products, Dedoncker says.
National Union of Workers lead organiser Neil Smith told the ABC, "There's only 1,900 people who live in Dennington and there's 100 people who work in this factory. This is going to be devastating for this community and this is the problem that we're find with the dairy industry, obviously these processors are all in regional areas and the communities rely on them."
Challenges "bigger and more complex" than ever before: Brumby
The Australian Dairy Plan - an initiative by Dairy Australia, Australian Dairy Farmers, Australian Dairy Products Federation and Gardiner Dairy Foundation - appointed former Victorian premier John Brumby as independent chair earlier this month.
On 10 May, it released its report on the current state of the dairy industry.
Brumby called it a "honest assessment assessment of challenges" that will be addressed during ADP consultations.
“Market volatility, challenging conditions on farm and a breakdown in trust between farmers and processors have taken a toll on where the industry stood a decade ago. It is vital that all sides now pull together to agree a roadmap of priorities and actions, in order to reset the direction and confidence of the industry.
“In my view, the challenges we face today are bigger and more complex than the industry has faced before. If we are to write the next chapter of dairy’s story, we not only need to be honest about the issues we face, but also open to taking difficult decisions and supporting radical change if required.
“A series of over 20 nationwide consultation workshops commence next week and we are calling on everyone in dairy to get involved and get your views heard.”
ADP is holding nationwide consultations through May and June 2019.
