Fonterra loyal to Lyttelton port
Fonterra remains committed to delivering most of its central South Island milk exports through Lyttelton port, despite being aware of the earthquake risks.
Lyttelton remains a preferred site because of its large container traffic, with incoming flows making it easy for Fonterra to refill and send them to milk markets.
Yet Timaru citizens seem to be questioning why more use is not being made of their port.
Timaru mayor Janie Annear pressed Fonterra trade and operations managing director Gary Romano at a question and answer session at a recent dinner in Timaru.
The question was referred to the farming co-operative's supply chain director Joe Coote, who said Fonterra recognised Lyttelton had its challenges and had got port operations up quickly.
He said it made sense economically and cost-wise to mostly use the Lyttelton option for transporting processed milk from central Canterbury.
"From a Fonterra perspective we represent our farmers shareholders and it's about getting milk from the farm to the other end of the world at the lowest costs."
Coote said Lyttelton handled many containers and this made it easier to refill them with milk powder and other products.
He said Fonterra was aware of the earthquake risk.
"The risk of mitigation is a factor. In the South Island there are four deep water ports, two in Canterbury, and it's great we have that choice."
Contingency arrangements are in place should there be another major earthquake.
Quake damage to the port is expected to develop into the single largest corporate claim ever made in the southern hemisphere of possibly $500 million. However, high container volumes have been maintained in recent months driven by agriculture demand from offshore.
Meanwhile, Fonterra says the proposed Central Plains Water scheme played little part in the construction of the new two-stage Darfield milk processing site.
New Zealand operations director Brent Taylor said milk tankers would have to go no further than 50 to 60 kilometres to pick up milk from existing farms.
"We are aware of 10 irrigation schemes in the South Island.
"We consider them to be longer term and they do not influence our building decisions. Central Plains did not factor in Darfield one or two in the medium or long term."
Stage one of the $500 million complex is close to being completed with a 15.5 tonne an hour dryer due to begin processing in August. Stage two, housing a massive 30t/hr dryer, will be operational a year later. The two dryers will have the capability of processing 7.5 million litres of milk a day at peak milk flows.
Fonterra expects the Darfield site to generate $780m a year. The South Island is leading milk growth with about 5 per cent, compared to 2 per cent nationally.