Australian dairy farm to cull 700 cows after cancelled milk contract

Based in Tasmania, Van Dairy Limited (VDL) confirmed it will cull around 10% of its herd after losing the 25 million litres supply contract. A number of “unresolvable commercial factors” were cited as the main reasons for Fonterra to end the partnership.

Matt Watt, Fonterra’s director of farm source, confirmed milk collections at VDL had already ceased: “We stopped collecting milk from all VDL farms on 1 February after providing VDL with several months’ notice to mitigate the impact on their business and supporting them in determining their next steps. The milk volumes supplied by VDL have declined significantly in recent years.”

Milk supply

According to Fonterra, the processor was actively seeking extra supplies from other farms in Tasmania to fill the shortfall as it did not intend reducing production at its Spreyton and Wynyard processing plants.

The owner of VDL referred to the situation as a “disappointing development”. “Given Fonterra is seeking to reduce their milk production and walk away for their exclusive milk supply agreement, it is appropriate Van Dairy manages its herd numbers now and into the future,” said Xianfeng Lu.

At least 700 cows will be sent for slaughter at the Greenham abattoir in Smithton, representing about 10% of the 7,000 cow herd. The calving season is well underway at VDL as the herd enters the winter production phase. Lu said he would continue to support the VDL farms and the 90 employees but did not confirm any further details about the cull. “I will continue to fight for the workers on my farms, the dairy industry and employment in the Circular Head region.”

Van Dairy farms has hit the headlines several times over the years including in 2018 when it failed to sort out overflowing effluent systems and a mass resignation of board members the same year.

Tasmania’s dairy industry

There were approximately 351 dairy farm businesses in Tasmania that produced 906 million litres of milk, or 11% of Australia’s national milk production in 2022/23. With an average dairy herd size of 477 there are around 170,000 cows in Tasmania.