Olam Food Ingredients (OFI) will release further details around its supply offer to farmers later this year after confirming plans to develop a new dairy processing facility at Tokoroa in South Waikato.
The Singapore-based company is ironing out the final details of its milk supply strategy. Decisions around the factory’s supplier catchment area and numbers had yet to be determined, OFI general manager of milk supply Paul Johnson said.
“It’s early days. I’ve met with farmers in the local area and rural professionals to get a read on interest. It’s been positive and well received. We haven’t put a specific kilometre radius on it, we’re just talking with anyone who is interested,” Paul Johnson said.
The factory site was 11 hectares and had scope to grow if more suppliers came on board. The target this early on was to work with farmers and ensure their businesses retained confidence, certainty and cashflow if they became suppliers.
“The number of farms will be a driver, but it’s really about the offering,” he said.
“We’re really excited with the conversations we have had and the feedback we have had.
“We’re really excited to be getting in front of farmers and taking expressions of interest and from there, it’s about building trust and relationships.”
It is now taking expressions of interest from potential farmer suppliers, employees, contractors and general trade suppliers.
OFI ranks among the top three dairy suppliers in the world. The Tokoroa plant will become part of a global network that spans 20 major milk consumption markets, including South-East Asia, China, the Middle East and Africa.
The first stage of the factory, expected to be commissioned in the third quarter of 2023 will involve constructing a spray dryer facility, capable of producing dairy ingredients, with a heavy focus on renewable energy and sustainability.
Additional facilities will be added over time to expand the range targeting customers using the ingredients for desserts, bakery, beverages and confectionery.
The ingredients produced will form part of OFI’s much wider natural ingredients portfolio, which includes cocoa, coffee, nuts and spices, ideal combinations with dairy for customised products such as yoghurts, protein bars and ready-to-drink tea, coffee and cocoa beverages.
Johnson says this value-add proposition would flow through in the offering to farmers.
“The milk supply strategy will also have incentives for farmers to be rewarded if their milk is used in an added value product,” he said.
“We will be paying the milk price and then looking at how we can recognise those downstream opportunities and looking at how we can pass that value through as part of the entire strategy.”
While having a competitive milk price was important, Johnson says farmer feedback had also pointed towards price certainty and ways to manage price risk volatility.
He says Olam’s cashflow policy will also be competitive relative to other companies.
OFI dairy senior vice president Naval Sabri says the new factory will complement and enhance OFI’s ability to support global customers to meet growing consumer demand for products that are natural, nutritious and delicious.
“It will also help address their innovation, traceability, and sustainable sourcing requirements as New Zealand’s farming standards and high-quality milk are very well regarded,” Sabri said.
“We have enjoyed a long and successful history in New Zealand through our previous investment in Open Country Dairy and we are pleased to be deepening our presence and relationships.
“Our Tokoroa facility will open up more supply options for farmers in South Waikato, and employment opportunities in the community.”
OFI operations director Paul Rennie says the new factory is expected to create 50-60 full-time jobs when fully operational, with more jobs anticipated in future stages of the development.
“We are looking forward to joining the Tokoroa community and sharing our strong focus on operating sustainably.
“This will include maximising the use of renewable energy sources, waste minimisation and building infrastructure to ensure we handle our waste in the most sustainable way possible.”
