Mataura’s new $240 million milk plant at McNab, just south of Gore, is on schedule to take its first milk on August 20.
The plant, backed by state-owned enterprise China Animal Husbandry Group (CAHG) in partnership with local farmers and Kiwi investors has been two years in construction.
Mataurea set its sights from the beginning on making the world’s best infant and adult nutritional powders, a complex and exacting business Yardley said is all falling into place.
“We are delighted with where we sit as a new company and we are very comfortable with the supply we have secured at this stage.
“We have a good bunch of quality farmer suppliers and as a start-up business we will grow that from here.”
Mataura has 24 suppliers.
“We are not expecting to reach optimal capacity in the first year as we want to be sure we progress every step to perfection before we take the next and that’s extremely important for a nutritionals plant as opposed to a commodity processor.”
Yardley said Mataura is focused solely on adding value through excellence.
“Milk is not our biggest ingredient. For example, our stage one infant formula only contains 22% milk.
“We are not a milk gobbler.
“We are a specialist nutritional plant and there’s quite a difference in manufacture and the quantity of milk required.
“While we are capable of being a milk processor, that’s not our game.”
It is likely MVM will recruit more suppliers up to a maximum 40 next season to secure the optimal milk required for its nutritionals programmes.
At full capacity the plant will process about 500,000 litres of whole milk a day, producing about 30,000 tonnes of formula a year. About 80% to 85% of it nutritional products will be exported.
The company is offering a competitive milk price and a supply premium of 20 cents a kilogram of milksolids, Yardley said.
On top of that Mataura is offering a range of incentives based on milk quality and on-farm performance.
“What we are paying farmers will match the best down here (Southland) and at the moment Fonterra has put up $7 so with the 20c premium MVM forecasts $7.20.
“On top of that, milk payment advantage through the incentives programme has potential to add a further 35c so we could be at $7.55/kg MS for suppliers achieving full benefit from the incentives programme.”
Mataura’s advanced schedule will pay farmers in August, ahead of Fonterra’s October payment.
Yardley said Mataura did not canvass suppliers but waited for prospective suppliers to approach it.
Fonterra and Open Country Dairies are the two key competitors in Southland.
“Our 24 start-up suppliers are all from Fonterra and all we have done is respond to inquiry so we are delighted farmers want to come on board with us. That’s been a huge positive.”
All suppliers are shareholders, a requirement of the Chinese partners who like them to also be owners. They pay a base subscription share price of $2.25/kg MS. The number of shares issued is proportionate to the annual share valuation, now 85.2c a share.
“Farmers have seen the nutrition-focused strategy as an attractive alternative to dwindling commodity returns.”
Yardley said nutritionals is not just about infant formulas as increasingly throughout the world there’s growing demand for adult formulations for an ageing population wanting superior nutrition.
“Demand for that is growing end on end.”
Other growth areas are the health and sports sectors.
“As medical science progresses there’s more focus going on nutritionals for any number of health-related conditions and sports drinks are a growing market too.
Mataura is focused on delivering value-add through nutritional formulations and custom-built the plant to meet that demand.
“We built and certified the plant to pharmaceutical standard so that allows us to do a lot of what other processers in New Zealand are not able to do.”
Mataura is the only plant in NZ with nutritional compliance to standards set by the Ministry for Primary Industries, China’s Food and Drug Administration and the United States Food and Drug Administration.
Another layer of validation of systems and processes by an external agency has been added above that compliance to provide further quality and safety corroboration for customers.
To sell nutritional formula at $85 a can instead of $30 means everyone along the chain has to strive for excellence.
“We are going beyond compliance to validate to customers that everything in the business is working as it should.
“And we are well geared to meet the growing demand for nutritionals and pay returns accordingly to farmers for excellence while striving to be the world’s best nutritionals business,” he said.
