Fonterra’s Board has given the green light to spend NZ$555m on increasing its processing capacity to help meet global demand for dairy products.
On the same day that it announced a major deal with a Chinese infant food manufacturer, this investment, totalling NZ$555m (€320m) will grow the co-op’s processing capability and allow more flexibility to better optimise production, according to Fonterra’s CEO Theo Spierings.
“Our strategy is to increase earnings by driving more milk volume into higher value categories globally by turning the wheel from commodities to higher-margin products,” he said.
“By creating more options for our New Zealand operations we are better placed to be able to make the product mix that delivers the greatest returns to our farmers and meet the needs of our consumers and customers worldwide.”
Approval has been given to build a drier at the Lichfield site in South Waikato:
· Capable of processing up to 4.4 million litres per day;
· Similar in size to the world’s largest drier at Darfield which produces up to 30 metric tonnes of Whole Milk Powder per hour, and 700 metric tonnes per day; and,
· It will use the latest energy-efficient processing and water reuse technology.
Three plants will also be installed at the Edendale site in Southland:
· Milk Protein Concentrate (MPC) plant which separates protein from skim milk and turns it into protein powder – capable of processing 1.1 million litres per day
· Reverse Osmosis (RO) plant which will increase capacity on an existing drier by 300,000 litres per day
· Anhydrous Milk Fat (AMF) plant capable of processing 550,000 litres of milk into cream per day.
Fonterra Managing Director of Global Operations Robert Spurway said the Co-operative has invested more than $1.8 billion to grow processing capacity since 2011.
“We are investing ahead of the milk growth curve to give us the flexibility to take advantage of relative market prices, including during the peak season. It will also accommodate growth from existing farmers and new volume from joining farmers,” he said.
“We have to ensure we have the right balance with having the capacity to cope with additional milk produced during the peak of the season, while making sure we avoid having millions of dollars’ worth of infrastructure standing idle in our quieter months.”
