DAIRY NEWS DECEMBER 13, 2016
8 // FONTERRA LICHFIELD DRYER OPENING
Big picture determines spending on plants – Wilson SUDESH KISSUN sudeshk@ruralnews.co.nz
FONTERRA CHAIRMAN John
Wilson says the co-op does not make investment decisions based on a single season. Speaking at the opening of a $360 million milk
powder dryer at Lichfield, South Waikato, he said milk volumes have continued to grow; total volumes increased from 1.2 billion kgMS in the 2001-02 season to 1.9b kgMS in the 2014-15 season. “As milk volumes have continued to grow, we’ve built ahead of the milk curve and are significantly
better placed to take all the milk at peak and get it processed into the most valuable products at the time,” Wilson says. He noted that Waikato milk volumes are down 14% on last year. Nationally, volumes are down 5% for the season as farmers optimised businesses in response to
From left Fonterra chairman John Wilson, Taupo MP. Louise Upston, operations manager Sam Mikaere, Raukawa iwi member Ruthana Begbie, South Waikato Mayor Jenny Shattock and Fonterra chief operating officer Robert Spurway at the opening.
lower global prices and poor weather. Wilson says with less milk this season, Fonterra will be looking carefully at how it will meet market demand, specifically whole milk powder. “But we don’t make investment decisions based on a single season,” he says.
To be competitive Fonterra needs the most efficient farmers, the most efficient milk collection and logistics, and the most efficient manufacturing facilities. Wilson says last year these efficiencies helped to add $560 million to the milk price. “If you have the
LICHFIELD INVESTMENT ■■
The $360 million project was completed on time and under budget.
30 tonne/hour dryer started in September
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Capable of processing 4.4 million L of milk each day
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3000 people worked one million hours to finish the project, completed under budget
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The new distribution centre can store 40,000t of whole milk powder for railing in containers directly to a seaport.
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money and some supply, anyone can build a milk processing site, and anyone can drop a large format, high efficiency dryer onto that site. “But what makes our plants like Lichfield different is scale, which means greater efficiency, lower cost of production per litre and, ultimately, more value out the back end when that product reaches the market.
“What sets us apart is our ability to keep our assets full of milk, keeping our cost of production low, and getting the best price for our ingredients and higher value milk products through our strong customer relationships. “These highly efficient plants are critical to our success in global markets.” @dairy_news facebook.com/dairynews
LOOK AGAIN AT DIRA FONTERRA CHAIRMAN John Wilson says the Government needs to revisit the Dairy Industry Regulations Act (DIRA). He says making the most of the improving global market depends on Fonterra farmers’ proven ability to produce quality milk at a low cost and on the co-op’s investment in capacity to process that milk. “In some cases our freedom to make those investment decisions is still restricted by DIRA, which the Government needs to go back and revisit. “Given the competitive market for milk in New Zealand, our co-op should not be obliged to accept every new milk supplier, particularly when this impacts our processing investment decisions. “The requirement to pick up all milk is inconsistent with our strategy to create the maximum value from our farmers’ milk, and with the Government’s desire to maximise value from NZ’s primary industries.”