MVM VOICE Issue 01-March 2019

MVM VOICE A QUARTERLY DIGEST BY MATAURA VALLEY MILK

March 2019 - issue #01

First Milk

9:41am on the 20th August 2018 marked a very special milestone for Mataura Valley Milk.

Opening Ceremony

November 22nd 2018 opening ceremony with over 450 guests.

Global Sales Report

Champak Mehta provides a market insight in sales report.

Supplier Profile

Featuring Clydevale farmer Pete Benny.

Creating Tomorrow’s Nutrition mataura.com

CREATING TOMORROW’S NUTRITION

issue #01 March 2019

GM report in a seamless supply chain to engage our global nutrition customers and consumers. To achieve this, we will require everyone in our business, directors, shareholders, farmer shareholders, employees and suppliers to be aligned with a single purpose of “Creating Tomorrows Nutrition for a Growing World” and to deliver this through a strategic roadmap executed with passion and precision. Over the next four weeks, management and the board will be reviewing this strategic roadmap, once reviewed it will be shared across the business for everyone’s input and understanding.

Before Christmas, I travelled to China to visit key nutritional

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customers; this visit was supported by CAHG with Dr.Xue (Mataura Valley Milk Chair) and his team, it was great to see the relationships CAHG has within China. These relationships were key in allowing us access to the most senior people within these business’s which in turn allowed us to introduce Mataura Valley Millk and discuss further opportunities for mutual co-operation. This now provides a great platform for us to revisit customers at FIC (Food Ingredients China) in Bernard May, General Manager

Having recently returned from the Christmas holidays which allowed me to spend time with family and friends. I want to take this opportunity to recognise and thank all the people across our business who continued to work during this period whether at Mataura Valley Milk or on our shareholder’s farms.

Being away from the business has given me time to reflect on the many achievements of the last few years; there have been many, some outlined in this newsletter. As a business it is important we recognise and celebrate what we’ve achieved, learn from the past, but as Louis L’Amour said, “A ship does not sail with yesterday’s wind.” With that, we need to look to the future and enjoy the opportunities and challenges ahead.

March and also host some key nutritional customers here on site during March and April.

I would also like to make a special mention to everyone involved in the successful nutritional commissioning and the China market registration. Nutritional trials were completed before Christmas, and we are now in the process of compiling the quality and technical data. Further commercial production is likely to begin in March/April of this year.

Feedback from customers and suppliers has been extremely positive, our quality data and results have been exceptional, and I am confident that we are well placed for a successful future as a supplier of choice across the global nutritional market.

2019 opens another chapter in our business, which builds on the previous chapters and a will be focused on delivering great quality, with exceptional service, packaged

Bernard May General Manager

CREATING TOMORROW’S NUTRITION

issue #01 March 2019

First milk 9:41am on the 20th August 2018

marked a very special milestone for Mataura Valley Milk.

This was the exact time that the first tanker full of milk pulled onto site in readiness to put the first milk into the plant.

Ahead of this very special delivery staff, contracts, shareholders and guests congregated around the milk reception area in anticipation, many using the time to share their memories of the project with the newer members of the team. For many this was the moment that signified the end of a successful project whilst for others the event marked the start of something new and exciting, as first milk meant that first production was not far behind.

Following a few words from Bernard, Ian Tulloch spoke about his personal journey and his immense pride in seeing his vision finally becoming reality, he then had the honour of cutting the ribbon and formally welcoming the first tanker into the unloading bay.

During the peak season, an average of 23 tankers unloaded milk into the two storage silos. Each raw milk silo is capable of holding 250,000 litres, enough milk to produce 205,000 litres of skim milk and 22,000 litres of cream, or to put it another way enough milk to convert to 35,000kg of whole milk powder or 62,000kg of nutritional powder.

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issue #01 March 2019

Opening ceremony On the 22nd November, we welcomed over 450 invited guests to the official opening of the plant.

After a week of rain and floods, the weather finally broke and the day dawned dry and bright, much to the relief of the organising committee. For some, this was the first opportunity to visit the plant, whilst for others, this was the culmination of many years of work either as an employee or as a contractor.

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Guests were given the opportunity to have a guided walk through the viewing gallery and also take a narrated bus tour around the site.

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The official ribbon cutting and the unveiling of the commemorative plaque.

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Caption

Caption

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issue #01 March 2019

Grant O’Connor from GEA presenting Bernard and the project team with a replica of the dryer they installed.

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The day was completed by a gala dinner hosted in the beautifully decorated MLT Event Centre where staff welcomed guests with celebratory drinks and canapes prior to dinner being served.

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Mark Sainsbury, our MC for the day, sharing his insights into partnerships between businesses, their local communities and the value that our primary industries play in supporting regional development. He then finished up with an entertaining but intimate story involving Sir Edmond Hillary, himself and an empty tin of Edmonds baking powder!

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07

For many the highlight of the evening was Steven and Rhonda Bamford sharing the story of their journey to becoming Mataura Valley Milk milk suppliers and shareholders.

Brent Robinson spoke on behalf of Mataura Valley Milk staff and shared some of the milestones, challenges and triumphs encountered during the last two years. His speech certainly highlighted just how much effort has gone into bringing the plant to life.

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Site news FIRST PRODUCT - 21 AUGUST 2018

After years of planning and construction and over 800,000 labour hours, we have produced our first 25kg bag of Whole Milk Powder.

Our packing machine enables us to safely and reliably pack high-quality dairy and nutritional products into 25kg (55lb) bags at up to 10MT/hr.

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The packer features an integrated bag loading and filling system for accurate, dust-free filling. The filled bag is compacted and presented to the integrated heat sealing system without releasing the top of the bag and thereby ensuring the most reliable bag handling operation possible

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Infant Formula Stage 3 Trials December 2018 The first of our Infant Trials were conducted from the 3rd - 12th December. During this time our systems and procedures were tested. The teams were introduced to operational manufacturing techniques to produce IF in all areas from ERP/MES, Depal, Opti tip, Macro tipping of different powders, dispensing and tipping of micros, batching using oils, and the challenges that come with evaporating/drying and packing the first product.

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Throughout the 10 day period we witnessed steady improvement in all areas as processes and parameters were adjusted along the way to improve final product functionalities.

The campaign was successful and the team is looking forward to the next phase of IF production to build on knowledge and practical skills learned throughout this process.

Thank you to all involved over this challenging time.

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issue #01 March 2019

Quality

Steve Smith, General Manager Quality and Compliance

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Steve Smith, our general manager quality and compliance

Grading data for key quality criteria has been summarised for the first 100 days of production. This shows

Spec. Max. Protein

Spec. Min.

# Results

Max.

Min.

Avg.

Std. Dev.

-

34

120

37.2

34.9

36.21

0.5535

Varies

26

332

28.7

25.55

27.38

0.5673

4

-

330

3.25

2.17

2.73

0.1592

that the product produced to date

Fat

is of exceptional quality with very

Moisture

consistent results.

Ash

TBR

TBR

119

5.5

4.6

5.144

0.1690

Bulk Density

0.62

0.52

112

0.61

0.49

0.59

0.0150

Titratable Acidity

0.15

-

115

0.10

0.065

0.09

0.0064

Insolubility Index

1.0

0

109

0.70

0.1

0.18

0.0822

WPNI

5.99

1.51

118

2.80

1

2.11

0.3207

For a new plant, this is a phenomenal achievement.

The site quality and food safety systems have now been audited six times by AsureQuality on behalf of MPI. All audits have resulted in an “Acceptable” outcome, and the site has now moved up to the next tier of audit frequency, and the most recent audit was at “Step 4” (eight weekly audits).

Aerobic Plate Count

1000

Thermophiles

TBR

Thermo Spores

500

250

0

TBR

395

20

0

TBR

TBR

395

10

0

Mesophillic Spores

TBR

TBR

400

75

0

Enterobacteriaceae

TBR

TBR

424

ND

Listeria

ND

83

ND

Salmonella

ND

83

ND

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The project to validate that the controls implemented across

to be managed to very exacting regulatory standards,

the manufacturing plant are robust and repeatably produce

and the control of Master Data that defines every aspect

the product intended at the quality required has progressed

of our product and raw material specifications and how

to the point where Mataura Valley Milk has received

those materials are analysed and the testing limits they

clearance from MPI to allow the sale of the powders

have to meet. Both projects are at an early stage where

produced for human consumption. This has allowed the

the framework on which the data will be placed is being

first sales and export of products from the site. This is

designed. Once this is completed our project teams will then

another significant milestone for the site as it brings cash

be tasked with converting the existing data from sources

back into the business.

into the new systems, both of which will act to provide a “single source of truth� for the business moving forward.

Projects have been initiated to implement software systems that will enhance the effectiveness of two key areas of the business: control of documentation across site that needs

Steve Smith, General Manager Quality and Compliance

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Sales and Marketing

Champak Mehta, our global sales manager Born and bred in Taranaki with formal

Zealand, where I worked briefly in

training in the medical sciences,

a senior management role at The

economics and business, I’m a former

University of Auckland before re-

physiology lecturer and New Zealand

entering the primary sector as the

Army officer.

inaugural CEO of Potatoes New Zealand Inc. in January 2013.

I joined Fonterra in early 2003 and spent nearly 9 years with them, gaining

Before joining Mataura Valley Milk,

extensive experience in strategy,

I was the co-owner of a large multi-office

business development and general

real estate business in Auckland with a

management in a variety of roles in

former Fonterra colleague of mine.

New Zealand, the US and Singapore.

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Champak Mehta General Manager – Global Sales

I finished up in Singapore as the

We’ve had a very successful plant

Regional Manager, Asia-Pacific

commissioning in August and as

for DFE, the joint venture between

we develop our nutritional powders

Fonterra and Friesland Campina

programme and bring all our technical

in the pharmaceutical lactose space.

capabilities online, we’re currently focussing on producing Whole Milk

As the General Manager – Global Sales, I manage Mataura Valley Milk’s

In mid-2011, after having spent the

Powder. This allows us to bed in the plant

global customer relationships to deliver

bulk of my Fonterra career offshore,

as well as deliver the best stream returns

its strategic sales and profit targets.

my wife and I returned to New

in the current market environment.

Global Dairy Trade (GDT) prices for Whole Milk Powder (WMP) and Skim Milk Powder (SMP) have dropped away from their highs in April, due in part to a number of reasons:

1

The Europeans have large

2

New Zealand milk production

3

Some of the larger dairy

quantities of SMP stockpiled, some

has increased as the result of

manufacturers in this part of the

of which is approaching 2 years of

warm, dry weather in our major

world have sold large quantities

age. As they sell those volumes

milk producing regions, with milk

of WMP into the market as the

down its driven a softening global

production predicted to grow

Chinese buy up prior to 1 Jan,

SMP price.

4-5% compared to last season.

after which the duty on imports will

Most of this additional milk will be

increase another 10%.

processed into WMP.

CREATING TOMORROW’S NUTRITION

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However, low volume, high quality manufacturers like

Sales are going well with customers approving our samples

Mataura Valley Milk can identify and exploit niches that others

(check out our bright green sample bags, all lined up ready

might not pursue. Low spore Whole Milk Powder for UHT as

to head into market) without any issues. Confirmed orders

well as fat filled powders (currently highly sought after in the

received to date account for over 10,000MT and the first

Middle East) and niche instant / fortified grades represent

shipped product has already reached its destination markets.

opportunities for Mataura Valley Milk to establish itself as a

Feedback from customers has been very positive with

manufacturer of high quality nutritional base powders.

regards to quality and customer service via our distribution

We’re actively following a portfolio approach, planning to split our first year’s production between general trade Whole Milk Powder (WMP), niche commodity grades like Low Spore and instant / fortified WMP and some off the shelf infant formula base powder.

channels.

I’ve also just got back from two visits into Asia on October and November, where we see a lot of future demand for our nutritional powders coming from.

Market visits

resulted in opportunities for Mataura Valley Milk to engage.

The key takeaway from both these visits is that once we get approved as a supplier, even if it’s for commodity, SMP/WMP, we’ll have the opportunity to demonstrate our capabilities and be able to participate in larger upstream opportunities in the nutritional and infant formula base powder space.

Bernard and Dr Xue, our Chairman,

In October, I talked to the regional

Then in early November, Bernard

offices of our distribution partners as

and I attended the inaugural China

well as some large Tier 1 nutritional

International Import Expo in Shanghai.

companies in Singapore and Kuala

The size and scale of this exhibition

Lumpur, who were very impressed with

was staggering with the Exhibition

our plant’s capabilities. As a result of

Centre in Shanghai having over

this trip, we’ve been asked to participate

500,000 sq m of exhibition space.

in tenders for both commodity and

We also headed out of Shanghai

nutritional powders, which we are

to visit two major infant formula

working through as we speak.

customers, both of which have

are recently back from a visit into China to progress discussions with opportunities at a senior level.

We’re quietly confident that Mataura Valley Milk is off to a great start on its journey to be the world’s best nutritional business.

Champak Mehta, General Manager – Global Sales

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Farm update 3 columns

Udo Fuehrer, our milk supply manager Infant formula (IF) stage three trials

The South45°Milk Programme was

were complete before Christmas,

also discussed, and some excellent

the first production of our nutritional

suggestions have been made on

products is expected to start the first

how we can improve some of the

week in April.

conditions and requirements.

We are still having the odd difficulty

Dave and I have been busy recruiting

getting milk temperatures down to the

milk for 2019/2020 supply and have

required levels on some farms although

had great interest. We are now in an

this is getting a lot better than it was,

excellent position of being able to

thanks to some of you who have spent

select the best farms that are most in

a considerable amount of time and

line with our principles and beliefs and

Udo Fuehrer, Milk Supply Manager

money to achieve this.

will add value to our supply base. Final

Hi All,

Grading has been very low with only

It was great to see you all at this

the odd slip up marring what is, in

months Farmer Shareholder update.

general, an excellent overall result.

As you know, last week was Dave’s

What a fantastic turnout!

Thermoduric grades and freezing

final week with Mataura Valley Milk.

points seem to be the main issue.

We wish both Pam and him all the

Production is starting to drop off now

We are now confident that sampling

very best for their future projects

with cows in calf, and the pasture quality

is accurate and will be grading for

and look forward to their continued

is showing signs of more maturity and

freezing point grades from February

involvement with Mataura Valley Milk

seed heads. The lack of rain has seen

onwards. We will continue to monitor

as Supplying Shareholders.

some of our farms go to 16-hour milking,

these results. Please ensure that the

and some have even put the odd herd

wash processes that you have in place

I am looking forward to catching up

onto once-a-day milking.

are correct, ensuring that no water can

with you all on-farm soon. Please

get into the system.

do not hesitate to contact me should

014 14

approval for all new suppliers will be given at our March board meeting.

you have any questions or need any

All the AsureQuality Dairy shed audits are now complete, as are

We held our first Farmer Forum

assistance with our programmes as I

the South45°Milk Programme

meeting in February and covered

am only too happy to help.

assessments. It is pleasing to see the

a number of topics including the

effort some of our farmers have gone

Supplier App. We have a couple of our

to ensure that all relevant information

members doing a beta test on this and

was on hand at these assessments.

once happy we will roll out the changes

This effort was much appreciated and

to everyone. In addition to this, we went

made the process far easier and more

through the FarmScope program and

efficient for everyone involved.

the updated version that is coming out.

Udo Fuehrer, Milk Supply Manager

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issue #01 March 2019

South45ºMilk Programme Quality and Compliance

South45°Milk Programme South45°Milk | Quality & Compliance| Programme 300000

300000

SCC - Monthly Total

250000 200000

200000

170000 127000

100000

50000

50000 Aug-18

12 10

0

6 109000

117000 4 2 2

0 Aug-18

Sep-18 Oct-18

c Grades Per Month 12

5

1 Dec-18

8

6

Sep-18

Nov-18

109000

120000 117000

118000

120000

Dec-18 Oct-18

Jan-19 Nov-18

Dec-18

Jan-19

15

12

10

2

ct-18

Nov-18 Sep-18

12

SCC - Monthly Total 12

6 127000 4

2

0 Oct-18 Aug-18

Sep-18

14

8

Aug-18

117000 127000 118000

Quality & Compliance Thermoduric Grades Per Month Thermoduric Grades Per Month 14

170000

170000

150000 109000

100000

0

|

SCC - Monthly Total

250000

150000

me

Quality & Compliance

Jan-19

Oct-18 Nov-18

6

5 118000 0

1

5 120000 2

0 Nov-18Aug-18 Dec-18Sep-18 Jan-19 Oct-18 Dec-18

Jan-19

1 Nov-18

Dec-18

Jan-19

CREATING TOMORROW’S NUTRITION

issue #01 March 2019

Supplier profile

The chance to sign up as a Mataura Valley Milk supplier shareholder presented the perfect opportunity for Clydevale farmer Pete Benny.

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Pete Benny and partner Anna, Mataura Valley Milk Supplier shareholders

“We were always looking for something a bit different, a bit niche, and this was the perfect opportunity.”

Benny and his family milk 950 cows on Camp Hill Farm,

The team put together by Mataura Valley Milk General

and the family also own nearby Kildare Farm, with 620 cows.

Manager Bernard May is of a very high calibre - and are also a down to earth bunch of people, Pete says.

Pete, 34, says they saw the nutrition plant rising at

“It’s all going pretty well,” he says.

McNab and quickly worked out it was a business model he, partner Anna, father David and stepmother Christine,

When Pete is not hard at work on the farm, he enjoys

wanted to be part of.

coaching rowing in Dunedin and Twizel.

CREATING TOMORROW’S NUTRITION

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People Welcome to: Pauline Dore – Export Co-Ordinator Helen Sidler – Administration Assistant Aidan Johnstone – Interim CFO Febbie Sangkop – Assistant Accountant Ray Hannah – Site Services Engineer Hamish Johnstone – Warehouse Operative Jonathan Wang – Nutritional Technician

Farewell to: Dave Yardley – Outgoing Milk Supply Manager We wish Dave and Pam all the best and look forward to their continued involvement with Mataura Valley Milk as Supplying Farmer Shareholders.

Mark Burtenshaw – Quality Systems Manager Mark is moving back to Christchurch where he will be closer to his family. Huge thanks to Mark for all the work he has done to date, we wish both Mark and wife Jane all the very best for the future.

Congratulations to: Malcolm and Melissa Wright on their new arrival – Kevin Lee Wright Colin Oliver and Gemma McGarry on their new arrival – Banagher Oliver

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issue #01 March 2019

Workplace wellness Thank you to everyone who participated in our first round of social sports.

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Mataura Valley Milk certainly made its presence known with

As a first step, we have recently launched an Employee

teams taking part in squash, tennis and netball. The great

Assistance programme with Eapservices. This is a 24/7

thing about the social format is that it is not just a great way

helpline for employees and their families and offers

of getting to know your colleagues outside of work but as it

professional counselling support for both work-related and

is very informal, gives novices a chance to give it a go and

personal issues.

above all, it is a fantastic way to unwind and have some fun!

For more information check out their website or even Please let me know if there are any other sports or activities

download their new app at: www.eapservices.co.nz

that you are particularly interested in, and I can see if we can get enough like-minded people together and arrange something.

I look forward to updating you with the official launch date in the new year!

Looking into the new year, we will be launching our Staff Wellness Programme. This is a very exciting project and will benefit all. The programme will incorporate all aspects of wellness including, movement, mental health, financial support and social interactions.

Paige Harris Reception / Administration Assistant

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issue #01 March 2019

Calendar of events 2019 18-20 MARCH

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MARCH

F.I.C (FOOD INGREDIENTS CHINA) Shanghai

MATAURA VALLEY MILK BOARD MEETING Shanghai

DATE TBC MAY/JUNE

DATE TBC JULY

MATAURA VALLEY MILK AGM

FARMERS SHAREHOLDER UPDATE

3-5

APRIL FEEDING THE FUTURE CONFERENCE 2019 Melbourne

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Contacts Bernard May General Manager E bernard.may@mataura.com P 027 495 2632

David Ward Hilton Haulage Transport Manager E davidw@hiltons.co.nz P 027 232 4900

Udo Fuehrer Milk Supply Manager E udo.fuehrer@mataura.com P 027 6455 269

Sonia Morrison Executive Assistant E sonia.morrison@mataura.com P 027 6455 001

Aaron Moody Farmer Shareholder Director E aaron.moody@moody.co.nz P 027 577 6098

Mataura Valley Milk Limited 19 Pease Street, McNab, Gore 9771, New Zealand PO Box 42, Gore 9740, New Zealand P 0800 686 455 - mataura.com