Dairy processor Bega Cheese will cut 74 jobs from its factories in the Bega Valley and move production to the Strathmerton factory in Victoria.
Bega Cheese makes processed cheese and natural cheese for its own brand as well as other companies.
Processed cheese includes single-wrapped and canned cheese as well as cheese for the fast food sector, however the domestic market has been in decline for many years.
Executive chairman of Bega Cheese, Barry Irvin, said the move was a strategic one to rationalise production.
"The situation isn't related to the pandemic, it's related to our processing cheese factory," he said.
"We've elected to consolidate just the processed cheese into the Strathmerton facility because it has been purpose-built.
"Anyone who goes to the supermarket these days will see that consumers are buying natural cheese slices not processed cheese slices … it's a shrinking market."
The cut represents 12 per cent of 600 workers in the Bega Valley which the company hopes to fill with a voluntary redundancy process.
"We will have 74 staff that will not be required, we will have 19 staff go by August and the rest will be gone by the end of the year."
The company said it has undertaken an organisational structural review over the last 12 months as the dairy industry has been facing significant pressures.
The national milk pool has shrunk as dairy farmers have left the industry in droves, which has in turn created fierce competition for milk between processors.
Morgans Research analyst Belinda Moore, in a note to investors last year, said the competition for milk could be impacting the bottom line for Bega Cheese, who may have to "effectively overpay [farmers] for milk given the highly competitive environment".
'Another blow' to 'battered' local economy
Bega Valley Shire Mayor, Sharon Tapscott, said it would be "another blow" to the local community.
"It's very disappointing for those workers," she said.
"We all know the economic situation that we're in; this shire has been battered around from all sorts of directions.
"I would hope they can stay and find work in the area."
The Australian Meat Industry Employees Union, which represents workers at the factory, has been contacted for comment.
