In July, the Australian Competition and Consumer Commission flagged it would not oppose the acquisition.
Following this week’s Fonterra Board decision, the final hurdle for the sale is now approval from Fonterra’s farmer shareholders in New Zealand.
ADF president Ben Bennett said New Zealand farmers will closely scrutinise the deal’s merits.
"It’s going to take some convincing for the NZ farmer to support it; it’s not a fait accompli,” Mr Bennett said.
“As a Kiwi who is dairy farming in Australia, I know farmers on both sides of the ditch will have strong feelings on this deal.
“Here in Australia, we know it limits competition. In New Zealand, farmers will be looking to maximise their returns when this goes to a vote in late October or early November.
"The ACCC said it isn’t going to affect competition in the domestic milk market, but we very much disagree.
“Combining two major buyers reduces choice and bargaining power for farmers along a supply chain already dominated at the processor and retail end.
“It’s a major threat to farm gate prices and the Australian dairy industry.”
The VFF UDV says the future of some iconic Australian dairy brands could be in jeopardy.
UDV president Bernie Free said the acquisition could result in product duplication and some existing brands disappearing from supermarket aisles.
“Lactalis is now a global giant of the dairy industry following their purchase of Fonterra and that could spell the end for some iconic local brands,” Mr Free said.
“Our farmers produce the best dairy products in the world and I hope this move doesn’t restrict consumers’ access to locally made, fresh Victorian dairy products.”
Mr Free said the reduction in competition was likely to place downward pressure on farm gate prices, leaving producers with less negotiation power and jeopardising farm viability.
“This consolidation of processors raises the risk of rationalisation of processing facilities,” he said.
“Such moves could result in job losses, reduce regional investment, and undermine the infrastructure that has long supported Victoria’s dairy industry.
“I’m also concerned that increased reliance on imported dairy products may emerge to meet domestic demand.
“This would not only displace locally produced milk but also weaken the security of Australia’s own food supply.”
Mr Free said smaller processors could also find their access to toll processing, milk swapping, or supply contracts increasingly constrained, further limiting diversity and competition in the marketplace.
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