Mataura Valley Milk company director Aaron Moody said the $200 million investment in a pharmaceutical-standard plant near Gore in Southland was focused on nutritional powders and value-added products, lessening the impact of commodity cycles.
“We have the ability to focus on nutritional powers and added value straight up front but with the ability to run commodity products,” he said.
The company would start building its powder plant in spring, completing a project initiated by Southland businessman and racing car driver Ian Tulloch, Moody’s father-in-law, over eight years ago.
But for the global financial crisis it would have been running now.
Mataura Valley Milk was 71.8% owned by Beijing-based China Animal Husbandry Group (CAHG), a state-owned enterprise with turnover of $1.6 billion. It was also China’s fourth largest importer of dairy products.
CAHG specialised in agriculture and animal husbandry and had diverse agricultural businesses including production and operation, trading, research and development and financing.
The remaining shareholders would be supplying-farmers (20%), Hamilton business BODCO (5.6%), which is 40% owned by CAHG, and NZ investors.
Moody said the company was looking for 100 million litres of milk a year, equivalent to production from 15 to 20 farms, and initial statements of interest from farmers already exceeded that target.
No offer had yet been given to farmers.
Farmers would have to meet strict quality and monitoring criteria to supply milk for the manufacture of pharmaceutical-grade products.
The powder would be shipped to Hamilton where nutritional and lifestyle milk powder producer BODCO would grade, blend and pack for export.
Moody said Mataura Valley Milk would initially supply BODCO’s brands but it would also supply CAHG and eventually it intended to develop its own Mataura brand and sell to markets outside China.
“The appetite for nutritional powders is huge with China’s imports of infant formula growing by 51% in the 12 months to February 2016.”
Aaron Moody
Mataura Milk
The infant formula market in China was picked to reach $38 billion in 2017, which Moody said was a significant attraction.
“The appetite for nutritional powders is huge with China’s imports of infant formula growing by 51% in the 12 months to February 2016.
“Importantly, the price for infant formula and growing-up milk powders is less reliant on the global commodity dairy price,” he said.
It has resource consent for the 26.2ha site and construction was expected to start in October with commissioning in the first half to 2018 and production to begin in the 2018-19 season.
The drier would have capacity to produce eight tonnes an hour of commodity power and six tonnes an hour of nutritional powders.
According to its website, CAHG businesses range from livestock breeding to manufacturing of veterinary vaccines and pharmaceuticals, plant breeding, livestock farming, pet products, fertiliser, pesticides and instrument and equipment production.
It was the largest veterinary distributor in China and the country’s largest breeding importer with half the swine and poultry market.
“From our point of view, they bring stability because they are state-owned. It gives us comfort,” Moody said.
The Overseas Investment Office and Chinese Government had approved CAHG’s investment in Mataura Valley Milk.
