How Milk is used in Australia plus fat and protein balances

As we enter uncharted waters of economic disruption, which will change trade flows and what was considered normal, I look at the area I know best, the National dairy industry.

In Australia, we have run the last 20 years under a free trade policy, with no tariff barriers, reduced national supports for training, reduced international market support and no farmer support systems like the USA’s “Dairy Margin Coverage scheme”  or their farmer funded “Cooperatives working together” program which subsidizes exports to world markets, including Australia.   Our monitoring bodies report in the same formats that they have for the last 20 years and do not follow models like the USA where the monitor things like farm gate margins (which is really a revenue over feed cost model, which removes the confusions of land price/value and other incidentals) – which are based on a determined farm gate price and feed prices of the local area.   This figure is then used to trigger the Dairy margin coverage program.  An example of the monitoring can be seen on the US Dairy Export council’s web site and blog.

As a dairy technologist and industry analyst, I get concerned that Australia as a nation is losing its self-sustainability in food products and in particular dairy products.   We promote our exports which were significant under the system of 20 years ago, but the balance of trade in dollar terms and tonnes is decreasing rapidly.

To confuse the issue, milk is turned into many storable products, and we consume more milk as butter, cheese, cream, yoghurt, Ice cream, powders, and sports foods than we realize.

The confusing thing in reporting this is – how do you report how much milk is used to make all these products?  butter is concentrated milk fat, it takes about 20 litres of milk to make 1 kg of butter the by-products of this are skim milk and buttermilk – which are mostly turned into powders (about 2 kg of powders), other products like cheese are standardized to a fat and protein content before manufacture, and the by-product is whey which in large plants is either further processed or dried into whey powders.

If you want a more detailed description, please contact me and I can send out more information and links to help explain the situation.

In this blog, I am discussing 3 things,

  1. How much milk is needed to make all the dairy products consumed in Austalia vs how much milk is produced (which is dropping at 1 million litres per day!!!
  2. Australias Fat Balance ( how much dairy fat is used in the products consumed and exported versus how much is grown in Australia and imported.
  3. Australias Protein Balance ( how much dairy Protein is used in the products consumed and exported versus how much is grown in Australia and imported.

The sources include figures from Dairy Australia, International websites that monitor imports and exports and my own industry knowledge of working in and around dairy processing plants and government organizations for 44 years.

This graph has been made up based on “rule of thumb” volumes of milk needed to make a range of dairy products directly from milk.  The milk volumes come from Dairy Australias figures which are voluntary figures provided by processors.


In 2020 the population will increase and the milk production will decrease.

Another way to look at this is to compare the major components, which is also what the farmers get paid for – the fat, and protein.

To add to the confusion, Australia both imports and exports dairy products.

In these graphs, I have converted specific import figures (from Dairy Australia) to their fat and protein contents.



This means that we have to import to have enough to match our export commitments.   While it may be that we get a higher price for exports than imports – there is a real issue in times where supply chains can be disrupted.


The protein picture is better, this is because skim milk powder (a mix of lactose and milk protein) is the by-product of butter.


As 2019 and 2020 have been years of unusual weather – Drought, flood, fire and now social disruption by COVID19.

Dairy farmers are under stress, milk production nationwide is dropping and farmers are facing margin squeezes as the consumer markets force them to compete with cheap imports from Europe, the USA and New Zealand.

PERHAPS we should look at safety net programs that will support our PRIMARY producers.

If you want details on how these figures were calculated, please send an email.


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