Giant $212m dryer opens

The world's largest milk-powder dryer, costing $212 million, will be opened today at Edendale in Southland as part of Fonterra's strengthening of infrastructure, with more South Island developments to follow.

Fonterra has a rolling plan to upgrade its plants and warehouses, and the milk-powder dryer, ED4, has been fitted with world-leading innovation and technology to the extent that equipment with intellectual property rights is installed after the main fitout.

The new dryer, capable of producing 27 tonnes of milk powder an hour, will increase Fonterra's national production by more than 10 per cent to 1.1 million tonnes a year to allow the co-operative to capitalise on the strong global demand for milk powders.

Further investment will follow, with Fonterra readying itself to invest in more plant in the South Island if it continues to lead dairying's growth. The Edendale dryer coincides with dairying growing in the South Island by between 6 per cent and 7 per cent in the past year.

Fonterra Trade and Operations managing director Gary Romano said the South Island represented one-third of Fonterra's milk manufacturing and was the reason the Edendale dryer was installed.

"We do have some milk growth, particularly in the South Island. We talk about 2 to 3 per cent growth, and it is being fuelled by 6 to 7 per cent in the South Island."

New Zealand manufacturing general manager Brent Taylor said Edendale would eventually have to be upscaled again, with the improvements meeting demands for milk powder for the next two to three years.

He said Edendale had the largest processing capacity for a plant and in the next year would be the co-operative's top milk- powder producer.

"The next year or so we will be looking at our next South Island investment."

He said a slowdown in conversions and tighter control of bank lending during the recession would pass and dairying could be expected to grow again in the south, with improvements in farming.

The co-operative has been investing in infrastructure, spending $130m on warehouse upgrades, including a refit in Mosgiel and new dry and cool stores at its Crawford St complex in Hamilton. Another $90m is earmarked for new facilities.

In Southland, the ED4 dryer will boost milk-processing capacity in Southland by more than one-third to meet the forecast growth in milk supply.

In the past five seasons, Southland's milk production has grown by 40 per cent, with dairy farmers expanding production and more farms being converted to dairying, and this trend is expected to continue in the medium term.

About 500,000 cows from 1000 local farms provide the milk for the Edendale site, with more than one-quarter needed to supply ED4.

Edendale now has the capability to process more than 15 million litres of milk a day, with milk powder sent to markets such as the Middle East, Africa, South Africa, South America, Asia, Oceania and Mexico.

Elsewhere, Fonterra is downsizing some of its old or unwanted storage facilities, which had to be increased when more inventory was carried during the height of the recession.

Some old warehouses have been sold or are in the process of being sold in the North Island and another has been sold in Otago, while some leases have been exited.

- © Fairfax NZ News