National Foods, the Australian dairy processor, is to close a site acquired when it bought Dairy Farmers last year.

The company, owned by Japanese conglomerate Kirin Holdings, said that, following a “review of production requirements”, it would phase out production at its Shepparton factory.

National Foods plans to shift production from Shepparton, which employs 25 staff, to other sites after opting not to renew the lease on the site next year.

Arthur Murphy, group executive, manufacturing operations at National Foods, said Shepparton would be scaled back “gradually” to allow employees time to find alternative employment.

“Any decision that may result in job losses is never taken lightly but the closure is necessary to remove duplication in our operation and to help ensure National Foods remains a strong and viable business, especially in the current economic and competitive environment,” Murphy said.

“As a result of the acquisition of Dairy Farmers in 2008 – including three factories in Victoria – National Foods now has eight manufacturing sites in the state.

“Unfortunately, this excess manufacturing capacity is unsustainable in the longer term, which is why we’ve today (12 May) announced that Shepparton will be closed.”