Corangamite Shire mayor Neil Trotter says while Cobden's Fonterra factory appears safe from any closure, a similar situation like Dennington would devastate the town.
"We would be very concerned if something similar happened," he said.
"Fonterra is the lifeblood of Cobden. The last thing we would want to see is anything affect the factory."
He said the devastating effects of the St Patrick's Day bushfires last year were still felt by residents.
"That impacted the town quite significantly," he said.
"Fonterra shutting would be a double blow for the town."
He said dairy farmers were going through a tough time throughout the region.
Fonterra is the lifeblood of Cobden. The last thing we would want to see is anything affect the factory.Neil Trotter
"Competition for milk is getting fierce and some of that has been reflected in the price, but the dairy industry still has a long way to go," Mr Trotter said.
"It's not out of the woods by a long shot. There is no stability in price. We need that stability within the industry. We need to make sure people are getting a good return."
He said he was hopeful Dennington's closure would not affect Cobden.
"There's been no talk of a closure," he said.
"It will probably strengthen Cobden actually. There is quite a lot of product going through that factory. They (Fonterra) have spent a lot of money there."