Fonterra confirms closure of Victoria factory

Fonterra will close its century-old dairy factory in western Victoria, citing the ongoing drought among the reasons for a decision that affects 98 staff.

The New Zealand-based processor on Thursday said its Dennington plant, opened in 1911, was "not viable" in current market conditions, and would be shut down later this year.

"The Australian ingredients business continues to feel the impact of the drought and other significant changes that mean there is excess manufacturing capacity in the Australian dairy industry," chief executive Miles Hurrell said in a statement.

"With the reduced milk pool in Australia, we must put it into our highest returning products and most efficient assets. Dennington is over 100 years old and not viable."

The company had on Wednesday informed workers of the decision and a statement to milk suppliers is reported to have outlined a November closure date.