In what is being seen as another nail in the coffin for Queensland milk suppliers, a French-owned dairy business is shutting its Rockhampton factory at the end of the month, sacking all 47 of its workers.

Key points: The closure comes after Lactalis carried out an analysis of its Queensland manufacturing division

The closure comes after Lactalis carried out an analysis of its Queensland manufacturing division Lactalis Australia says the Rockhampton factory has been running only three or four days a week

Lactalis Australia says the Rockhampton factory has been running only three or four days a week Premier Annastacia Palaszczuk has written a letter to the company, saying "this is not good enough"

Lactalis Australia said it would also scale back yoghurt production at its South Brisbane site, citing changes to milk supply within Queensland.

The timing is questionable, with the international company winning a tender to supply milk products to the Metro North Hospital and Health Service just weeks ago.

That contract was awarded to the French company, despite local company Maleny Dairies also vying for the lucrative contract.

Maleny Dairies was supported by 11 South East Queensland farms and in recent years it invested more than $9 million in factory improvements, including robotic production facilities.

But Maleny Dairies maintained it was snubbed by the State Government because it made its decision on who could deliver the cheapest milk, ignoring its own "Buy Queensland" policy.

At the time, the State Government was accused of "complete hypocrisy" by Maleny Dairies manager Peter Falcongreen.

Factory operated in Rockhampton for 30 years

The closure in Rockhampton comes after Lactalis Australia carried out a complete analysis of its Queensland manufacturing division.

In a statement, Lactalis Australia said the operation had been at full production — running only three or four days a week — "for a number of years".

It said it was sorry to see the shutdown in such a tight-knit community.

"The Rockhampton factory has been part of the Lactalis/Pauls family for 30 years," the statement said.

"The welfare of the 47 Lactalis Australia employees at the Rockhampton factory is our top priority, and we will be working closely with everyone who is affected by the closure.

"All forms of support will be available to our employees throughout this transition time.

"This will include looking for opportunities where we can redeploy our staff to different Lactalis locations."

Brisbane operation may also lose jobs

Lactalis Australia said it would continue to be a big part of the Queensland community through its two other major factories in Nambour and Brisbane.

"We will continue to purchase milk from our dairy farmers in the Rockhampton region and redirect it to Nambour and Brisbane," the statement said.

"Queensland fresh milk will continue to be produced in our Queensland factories, with Queensland employees, using the milk from Queensland family-owned farmers."

Lactalis Australia blamed the scaling back of production at the South Brisbane Pauls factory next year on a lack of milk supply from Queensland producers, maintaining the factory had relied on transporting milk from other states to meet demand.

"Yoghurt manufacture will transition to other Lactalis factories in Victoria and Tasmania, which will reduce transportation requirements of milk between the states," the company said.

It said the welfare of its employees in Brisbane was also important and the company hoped to save jobs there.

The Lactalis group headquarters in Laval, western France. ( AP: David Vincent, file photo )

Lactalis Australia owns major brands Pauls, Ice Break, Vaalia and Breaka — iconic Australian products that date back to the 1930s.

It said it would continue to be the largest buyer of milk from Queensland farms, purchasing more than 150 million litres of milk from 114 Queensland dairy farmers each year.

It said despite job losses, it would still employ more than 600 people.

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Maleny Dairies was not officially commenting on the news of the Lactalis Australia closure but the ABC has been told it is shocked by the move.

Late this afternoon, Premier Annastacia Palaszczuk posted on Twitter a letter she wrote to the company expressing her disappointment in the decision.

"This is not good enough — I have written to Lactalis urging them to reverse their decision and support Queensland jobs," she wrote in a tweet.

Ms Palaszczuk said in her letter that her Government had dealt with the company "in good faith, in the interest of providing as many good secure jobs to Queenslanders as possible".

Her letter was entitled: "Support Queensland Jobs".

"Please be aware that I have asked my director-general, Mr Dave Stewart, to examine how the Queensland Government engages with Lactalis into the future," Ms Palaszczuk wrote.

She urged the company to "immediately review these decisions and continue to support Queensland dairy farmers and workers".

'Massive blow to Queensland's dairy industry'

Queensland Opposition agriculture spokesman Tony Perrett condemned the move by the French-owned food giant.

He said the State Government also had questions to answer over whether it knew the company was going to scale back production.

"Good due diligence would suggest that they look at all these things and through the awarding of that contract one would think they would make certain that the continuity of supply was there," Mr Perrett said.

Mr Perrett said Lactalis should have been upfront about its plans to close the Rockhampton facility.

"They need to be fair dinkum in the first instance, and I don't think they have been," Mr Perrett said.

"Remember they're a multi-national company and they have processing facilities around the world.

"But in this case they've tendered and said they can supply, yet at the same time a few weeks later they're now closing a facility and scaling back production — that's unacceptable.

"The foreign company that the Palaszczuk Labor Government backed over a Queensland-owned business is now cutting and running from this state."

Mr Perrett said Lactalis was "putting the profits of its foreign owners ahead of the jobs of Queensland workers and dairy farmers".

"This is a massive blow to Queensland's dairy industry and means more milk and dairy products from other states and overseas will be sold in our state," he said.

The LNP had tabled a motion in State Parliament demanding that Labor review its decision to choose Lactalis over Maleny Dairies and that it award at least part of the contract to a Queensland-owned business.

"It is now more important than ever than Labor reviews this flawed contract decision and back a Queensland-owned business that backs local jobs," Mr Perrett said.