The New Zealand company — which owns Western Star butter, Perfect Italiano cheese and the Mainland brands — operates eight manufacturing sites across Victoria and Tasmania and employs some 1600 people.
Fonterra chief executive officer Miles Hurrell has confirmed a “step-change”, a move that could include selling its Australian assets.
One Gippsland producer, Aaron Thomas, said the news had spooked some in the industry.
“This type of language, from any processor, just adds another level of uncertainty,’’ he said.
Mr Thomas said any sale must not reduce competition in an already shrinking market.
“My hope is if Fonterra do sell the Australian arm or parts of their business, an outsider or new player is the purchaser and not an already Australian-based processor.”
Dairy Farmers Victoria president Mark Billing agrees.
“The concern for dairy farmers in Victoria is that if it takes competition out of the market, particularly if one of the other big multinationals does come in and buy it," he said.
The decision represents a shift for Fonterra, which determined to retain its entire Australian business after a review three years ago.
“That was in a different context, for example, only Australia was in scope,” a company spokesperson said.
According to dairy farmer and Victorian United Dairy Farmers president Bernie Free, “less competition generally means that there’s less risk of people competing for your milk”.
However, Rabobank senior dairy analyst Michael Harvey said a deal prompting competition concerns would need to be approved.
“That will be for the regulators to tick off,” he said.
“It depends on who buys it.“
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