Meat & Livestock News

Australian Dairy Farm to Cull 700 Cows After Milk Contract Cancelled


  • Van Dairy Limited (VDL) in Tasmania plans to cull 700 cows, 10% of its herd, after losing a 25 million litre milk supply contract with Fonterra.
  • Fonterra cited “unresolvable commercial factors” for ending the contract, impacting VDL’s production and leading to a search for new milk suppliers in Tasmania.
  • The situation has sparked concerns for the local dairy industry and employment in the Circular Head region, with VDL’s owner committing to support the farm’s 90 employees.

In a significant development impacting Australia’s dairy sector, Van Dairy Limited (VDL), one of the country’s largest dairy farms located in Tasmania, has announced plans to cull approximately 700 cows. This decision comes as a direct response to losing a crucial milk supply contract with Fonterra, a leading milk processor.

The contract, which accounted for the supply of 25 million litres of milk, was terminated due to several “unresolvable commercial factors,” as stated by Fonterra.

Matt Watt, Fonterra’s director of farm source, revealed that milk collections from VDL ceased on February 1, following a notice period intended to lessen the business impact on VDL and assist in planning their next steps. This move is part of Fonterra’s broader strategy to adjust its milk production, despite the company’s efforts to source additional supplies from other Tasmanian farms to maintain output at its Spreyton and Wynyard processing plants.

The culling of cows, representing about 10% of VDL’s 7,000 cow herd, is set to take place at the Greenham abattoir in Smithton. This decision aligns with the farm’s need to manage herd numbers effectively, especially as the calving season progresses and the farm transitions into the winter production phase. VDL’s owner, Xianfeng Lu, expressed disappointment over the development but reaffirmed his commitment to supporting the farm’s 90 employees and the broader dairy industry in the Circular Head region.

VDL has previously faced challenges, including issues with effluent systems in 2018 and a mass resignation of board members the same year. The dairy farm’s situation reflects broader trends in Tasmania’s dairy industry, which produced 906 million litres of milk or 11% of Australia’s national milk production in the 2022/23 period, with an average dairy herd size of 477 cows.

This development raises questions about the future of dairy farming in Tasmania and the impact of contract terminations on local economies and employment. As the industry navigates these challenges, the support and resilience of local communities and stakeholders will be crucial in ensuring the sustainability and growth of dairy farming in the region.