Roger Carruthers | February 15, 2021 from GlobalHQ on Vimeo.
Harraways chief executive Henry Hawkins says the Dunedin-based cereal company is this year increasing its oat contracts with 44 Southland growers by 15%, to 13,500 tonnes.
Investors are being sought for the new plant-based factory, likely to be built at Makarewa outside Invercargill, from which oat milk will be the first product.
A new company, NZ Functional Foods, has been formed to drive the project and the Tindall Foundation is a cornerstone investor.
But with new uses for oats pending, including as a beverage extract, Hawkins says demand will increase, giving farmers the potential to diversify.
Harraways has a supply contract for Dunedin oat beverage extract producer Otis Oat Milk, which currently sends its grain to Sweden to have the liquid extracted before importing the milk back to NZ.
Hawkins says there are multiple entities keen to establish the plant, and at this stage Harraways will remain an oat supplier to Otis.
“We are not looking to invest currently,” Hawkins said.
“We don’t want to confuse the relationship between supplier and shareholder, but that is a short-term view and if the situation developed, we would look at an opportunity.”
Otis Oat Milk declined to be interviewed.
Oats became “cool” during the pandemic lockdown, Hawkins says, during which sales of Harraways oat products increased 60% as people cooked more at home and looked to eat healthy products.
The extra contracted volume this year is driven by that growth, but also new uses such as oat beverage.
“We need that greater volume off the back of what happened last year,” he said.
Hawkins says oat milk will never replace dairy.
“It is important to say that I don’t see oat milk taking over the world; there is room for oat milk and dairy milk,” he said.
Other new uses for oats are pending in chocolate, yoghurt and peanut butter, while in Scotland it is being used to make vodka.
Oat Industry Group chair Graeme Gardyne says while growth has been steady, the boost of having an oat milk plant in Southland could significantly change the industry.
Gardyne estimates about 2000ha is being grown this season for human consumption, with an unknown additional area sown in stock feed or for other mercantile firms.
“It’s growing, but not spectacularly,” the Gore farmer says of the area under cultivation.
Gardyne says livestock farmers are now sowing oats as a nutrient catch crop on paddocks where stock has been wintered.
“Livestock farmers are sowing it after winter crops to remove the nitrates then they are harvesting the oat crops for silage or baleage before regrassing, or back into kale or some other wintering crop,” Gardyne said.
“That is due to the freshwater reforms, but it is actually quite a big use for oats.”
Oats were ideal as it handled wet, cool conditions which can plague the south during spring.
