Australian cheese production is falling behind record domestic demand, and USDA's own figures show the import gap that creates is increasingly going to US suppliers.
The United States is capturing a growing share of Australia's cheese import market, according to USDA's Foreign Agricultural Service. Australian production is not keeping pace with rising domestic demand, the agency reported in its July 2026 dairy circular.
Key Facts
- Up 2% from 2025, Australian cheese production is forecast to reach 440,000 tonnes in 2026.
- Domestic consumption is expected to climb to a record 365,000 tonnes, up from 350,000 tonnes in 2025.
- Australian cheese exports are forecast to reach 175,000 tonnes in 2026, up 2% from 2025.
Dairy processors in Australia are directing more of their available milk toward cheese, per the report. A shrinking herd and higher land values are keeping overall output growth modest.
The result is a widening gap between what Australian cheese plants can produce and what Australian shoppers and food service buyers want to eat right now.
Australian Cheese Supply Falls Behind Demand
USDA's July circular puts Australian cheese production at 440,000 tonnes for 2026, up 2% from 430,000 tonnes in 2025. Consumption is on pace for a record 365,000 tonnes, up from 350,000 tonnes in 2025. The gap is what is pulling in more imported cheese, not a single trade decision.
Herd Size and Feed Costs Limit Growth
Australia's milk output is set to bounce back to 8.7 million tonnes in 2026, after a drought-hit 2025. USDA pegged the rebound at 2.4%. Even with that recovery, the herd itself is shrinking.
High feed costs and land values are limiting how much processors can expand. Processors are still shifting available milk toward cheese over other dairy products, USDA data show. Cheese offers stronger returns than alternatives like skim milk powder.
US Suppliers Expand Their Australian Foothold
USDA's Foreign Agricultural Service reported that Australia's cheese imports are diversifying beyond its traditional suppliers. The United States is picking up more of that business as buyers look for a wider range of specialty and food service cheeses. USDA did not break out an exact volume or share for the United States within that import mix.
