King Island Dairy future still bright, says the island's mayor

Saputo Dairy Australia has said it's reviewing all its King Island operations, with the potential sale of the factory.

Cr Blackie used to work at the factory before becoming mayor.

"I want to say the King Island Dairy company is a legendary Australian company and brand, I don't know of a corporate headquarters that has a bigger trophy cabinet," Cr Blackie said.

"It's testimony to them not only being pioneers of the industry, but also the most award winning cheesemaker in Australia's history."

The biggest issue facing the factory was a dwindling milk supply, he said.

"Saputo actually have to own farms on the island, to guarantee their milk supply," he said.

"That is a logistical overhead for them."

He said it could be the future of cheesemaking on King Island concentrated on artisan quantities of very high quality products.

But he said he felt there was an appetite to for someone to buy the factory.

"I have heard anecdotally Fonterra, Bega and other processing companies have always admired King Island Dairy, this may be an opportunity to buy an Australian legend," Cr Blackie said.

Closure would have a huge impact on the island - "but I am confident the business will pull through.

"They have been in worse predicaments before and have survived - there have been at least seven owners of King Island Dairy that I can recollect," he said.

Long-time island dairy farmers Philip and Kelly Lancaster, who milk 150 head, said they hadn't heard much about Saputo's plans, apart from the fact a review was taking place.

"It would be handy to know something, to know what to do about maybe getting cows back in calf right now," Ms Lancaster said.

"Because we are where we are, we have no other factories we can send milk to.

"As much notice as possible would really help us out."

Mr Lancaster said he believed the plant was viable, although it had faced a number of challenges, including freight, over the years.

"I was keen to keep going a bit longer."

Neither said they were surprised by the announcement.

"It used to be thriving - when I first stated (27 years ago) there were close to 30 dairy farms, there were discussion groups every month and it was really good," Mr Lancaster said.

"I certainly hope its viable, there is huge potential here."

Former King Island dairy farmer Gary Strickland said he believed problems started in 2001, when National Foods bought the factory.

"They had 30 million litres of milk, then they bought Lactos," he said

"They were making South Cape products on King Island, but when they bought Lactos, they shifted about 18 million litres of milk off the island and made those cheeses in Burnie," Mr Strickland said.

King Island was one of the first food brands in Australia, established by Bill Kirk in 1978, he said.

"Whoever buys it would have to grow the supply base and the production of cheese to make it viable - hopefully Saputo will eventually sell it, if they don't continue to run it," he said.

"There is enormous growth still to be brought into that brand."

It was not viable to ship milk off the island - "you can ship it out in containers, which Lion did to Burnie, but it's not profitable," he said.

"When National Foods bought the brand they paid a lot of money for it, but there were two conditions - one is the King Island Dairy brand had to use milk from the island, and also it had to be manufactured here.

"One of the best products put out from here, which National Foods stopped doing, was King Island cream - all the chefs used to talk about it.

"There is certainly a place to get a decent cream out into the market."

Mr Strickland said it was "almost like" whichever company owned the factory since National Foods had run it down, "so they had an excuse to shut it."

No new suppliers had been taken on since 1996, he said.

"We sold our farm off five years ago, when we retired," he said.

"The people who took it over milked for three years, then shut it down - it was about a third of the supply for the factory" Mr Strickland said.

"When they shut it down, Saputo didn't even blink, they didn't look around, or take anyone else on - that was certainly sending out signals that something wasn't right."

He said the factory, and associated farms, would employ around 100 people, out of a population of 1500.

The island was still recovering from the closure of the abattoir in 2012.

"The beef farmers still have a market in being able to ship their cattle off the island, which is not as good, but it's still a market," he said.

Tasmanian Farmers and Graziers Association Dairy Council chair Geoff Cox said while the potential sale was a commercial decision, the company needed to be considerate of the island's farmers.

"Every avenue should be taken to find a buyer," Mr Cox said.

"If it were to close, it would be a real shame - there is a long history there and it is an iconic brand.

"They (Saputo) have a responsibility to the community and farmers and it would nice if it went back to Australian ownership, I think."

The Tasmanian State Growth department had been in discussions with Saputo for some time "around the challenges faced by the King Island Dairy operation, especially given the age of the facility and its remote location," a spokesman said.

"We are aware of Saputo's announcement of a review into its King Island Dairy operations and note this is one in a series of such reviews the company has been undertaking across its Australian operations to enhance its efficiency and strengthen competitiveness," he said.

"We will continue to work closely with Saputo as it progresses its review of the King Island operations.

"We note Saputo has made it clear no decisions have been made at this time."