Fonterra eyes up Studholme plant

ANDREA FOX
Last updated 16:44 06/07/2012
studholme nz dairies
JOHN BISSET/ Fairfax NZ

New Zealand Dairy's Studholme plant.

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The small size of New Zealand Dairy's Studholme plant means it is well-suited for use in short and specialised manufacturing runs, Fonterra says in an application eyeing up the factory.

Fonterra has a deal to buy the dairy-processing assets of New Zealand Dairies, which is in receivership. But while awaiting a Commerce Commission decision, the dairy giant wants to buy the milk of the failed company's contracted farmers and operate the plant.

Exporter New Zealand Dairies was founded six years ago to build a wholemilk powder processing plan on 55ha at Studholme. The plant was commissioned in 2007 at a cost of $108m.

It has the capacity to process about 800,000 litres of milk powder a day, or 30,000 tonnes a season.

In its submission, Fonterra said the Studholme plant could be expanded within its existing resource consents to allow for the development of a second five-tonne-per-hour dryer and much of the infrastructure required for expansion was in place.

Fonterra said it was important for the continuation of milk supply that when milk processing companies fail, "they do not take their farmer suppliers and skilled employees down with them".

Without Fonterra's offer to operate the plant meantime, farmers would face the loss of substantial money owed to them for milk supplied before the receivership in May, the dairy giant said.

"The importance of the dairy industry to New Zealand's prosperity cannot be overstated. The industry's success in global markets provides a significant boost to the economy and a bulwark against continuing global economic uncertainty.

"But there is a human element to this success. To sustain growth in the face of increasing challenge from global competitors, the dairy industry needs to  continue to attract both farmers who are willing to commit as suppliers and skilled workers who are prepared to commit their industry and expertise.

"Retaining their involvement and employment is vital to the industry that is a major contributor to New Zealand's GDP."

New Zealand Dairies is wholly owned by Nutritek Overseas, a Singapore-based company ultimately owned by Russian partner company Nutritek, which was declared bankrupt.

Nutritek's head company Nutrinvestholding was declared bankrupt by the Moscow Commercial Court in March this year.

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