Fonterra to grow

January 30, 2018

In action . . . On the packaging floor of the Stanhope factory last week.

Important asset . . . Stanhope site manager Jason Wright at the Fonterra factory which also sports the huge mosaic mural.

Fonterra’s Stanhope factory will become a key part of its international strategy with a further $125million to be spent on the recently upgraded facility.

The company has recently completed a $140million cheese plant in the town of only 500 people.

Just down the road, at Girgarre, milk company ACM is also building a new dairy factory.

The Fonterra investment will double the size of the cheese plant, increasing cheese production by a further 35000tonnes for a range of cheeses including cheddar and mozzarella.

Stanhope can currently produce 45000tonnes of product including cheddar, mozzarella, gouda, parmesan, pecorino, romano and ricotta.

Fonterra managing director Rene Dedoncker said the expansion would turn Stanhope into one of its largest facilities.

The company will be looking for up to 200million litres of milk to satisfy its $165million factory expansions across Victoria.

Mr Dedoncker said the Stanhope investment largely focused on expanding the site’s cheese making capacity and doubling the daily milk volumes it could process.

‘‘We are looking for the next 200million litres of milk,’’ Mr Dedoncker said.

‘‘We are seeing a boost in production, particularly in the north.

‘‘We hope an extra 60 to 80million litres will come from our own farmers.

‘‘We do see the need for more farmers. We have a number interested in joining. It will be a mix.’’

Mr Dedoncker said customers wanted trusted supply options out of Australia, especially for products like cheese, whey and nutritional powders which are in high demand.

‘‘We have a clear strategy that is delivering sustainable returns. To create value, we need to invest to stay ahead of the demand curve. These investments support our aim to secure positive returns back to our farmers on both sides of the Tasman.’’

Fonterra is looking into whether its Australian operation could become a co-operative, and will put information to its Australian suppliers in April.

Fonterra is a farmer owned co-operative in New Zealand but runs as a private company in Australia.

Asked about pricing, Mr Dedoncker said they knew they needed to have a competitive farm gate milk price every day.

‘‘Our milk price is $5.60/kg milk solids, (absolute price $5.62) following a step-up prior to Christmas.

‘‘In addition to the $5.60 there is the 40¢ milk payment, taking the total to $6.

‘‘We are confident that price is sustainable in the season.’’

Cheese production at Stanhope’s Fonterra factory will almost double and employment increase by up to 36 people as part of its new upgrade.

The company plans to spend about $125million at the site.

The investment in the new cheese plant and aligned facilities will increase cheese production by a further 35000tonnes at the site for a range of cheeses including cheddar and mozzarella. Stanhope currently produces 45000tonnes of product including cheddar, mozzarella, gouda, parmesan, pecorino, romano and ricotta.

Stanhope site manager Jason Wright said the plant, which officially reopened in August 2017 following a $140million rebuild and expansion, was seen as an important asset in Fonterra Australia’s push to make the most of domestic and global demand opportunities for products like cheese.

‘‘It’s important for dairy in Australia that we’re showing confidence and investing in expansion. We believe in the long-term demand prospects for dairy, and especially for cheese given the growth we’ve seen in food service.’’

The cheese investment follows on from a $1.3million investment to support product innovation, as Stanhope rolls out its Perfect Italiano Ricotta Stir Through for pasta and a further $6million to secure efficiency gains.

‘‘Ricotta is a staple product for us and our investments have enabled us to launch a first-of-its-kind innovation. We’re confident the dollars spent in the plant will bring solid returns to farmers with these value-add, fit-for-purpose offers.’’

Mr Wright said with the cheese expansion the site was keener than ever to secure additional supply.

‘‘Our Australian milk pool has grown by 400million litres this season, and with this new investment we plan to grow our milk further which we expect will come through growth from our existing farmers who wish to grow, coupled with milk from new suppliers joining Fonterra.

‘‘We’ve employed an additional 15 drivers after investing more than $8million in 14 truck and trailer units across our milk collection regions in Victoria and Tasmania,’’ Mr Wright said.

The Stanhope site employs about 150 people including the milk supply group, with about 110 working in the factory.

The factory holds regular consultation meetings with a Stanhope community advisory group.

Construction is expected to be finished by the end of this year.

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