"As always it's better if you are aware of these things and you try to work them through before they happen," Mr Tehan said.

"Ultimately these are decisions for the company, I have always had a good working relationship with Fonterra. With the government in caretaker mode during the election, I can understand why they were perhaps resistant."

It's also understood that Fonterra contacted the federal government's most recent Agriculture Minister David Littleproud only a short while before informing staff of the closure.

Fonterra says the Dennington site had operated at about 30 per cent capacity since October last year.

Mr Tehan said he could "understand" the rationale behind the closure, but it was "disappointing" for workers.

"Once it was explained given the recent large investments into the Cobden plant, I could understand the business rationale," he said.

Mr Tehan said the dairy giant had assured him that it would honour worker entitlements and redundancy payments.

"There has been no call for government support, although we would be prepared and willing to help the workers impacted by this," he said.

Mr Tehan rejected calls from lobby group Farmer Power for a milk levy on processors, and said that government market intervention should be kept to a minimum.

"It leads to unintended consequences, putting forward policies that will see the industry grow I think is the best way to go," he said.

"My hope is now that Dennington has closed, we will see the focus go on growing milk supply and growing throughput for the factories in the area."

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