This manual has been developed to help the Australian dairy processing industry increase its competitiveness through increased awareness and uptake of eco-efficiency. The manual seeks to consolidate and build on existing knowledge, accumulated through projects and initiatives that the industry has previously undertaken to improve its use of raw materials and resources and reduce the generation of wastes. Where there is an existing comprehensive report or publication, the manual refers to this for further information. Eco-efficiency is about improving environmental performance to become more efficient and profitable. It is about producing more with less. It involves applying strategies that will not only ensure efficient use of resources and reduction in waste, but will also reduce costs. This chapter outlines the environmental challenges faced by Australian dairy processors. The manual explores opportunities for reducing environmental impacts in relation to water, energy, product yield, solid and liquid waste reduction and chemical use.