Saturday, March 30, 2024

Two new plants are now online

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Early spring and the milk season have brought two new Fonterra processing plants in Canterbury into operation for food service products at a total construction cost of $340 million.
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The opening of the first cream cheese plant at Darfield and the third mozzarella cheese plant at Clandeboye have marked a temporary halt to major capital expenditure on new food service capacity.

Global operations chief operating officer Robert Spurway said a second cream cheese plant at Darfield is planned but not yet started.

The timing will be dependent on customer demand but it could be ready for spring 2019 or 2020.

It will be built under the same roof as CC1 and have the same capacity of 24,000 tonnes annually but cost only half as much.

Clandeboye C3 cost $240m and Darfield CC1 $100m, spread over two or three financial years from the initial letting of construction and fit-out contracts to completion payments subject to performance criteria.

The rapid expansion of food service capacity over the past five years accounted for a large proportion of total Fonterra capital expenditure.

Spurway is not allowed to say exactly how much in advance of the 2018 financial year accounts to be released on September 13.

In late May at the third-quarter business update Fonterra said its full year 2017-18 capital expenditure would be $800-$850m, a similar amount to the previous financial year.

The Darfield plant effectively doubled Fonterra’s cream cheese capacity in response to quickly growing demand from China and other Asian countries for use in bakery products like cream cakes and the latest hot drink craze in China, tea macchiatos.

It contains new technology to vary the firmness, flavour and colour of cream cheese according to the specifications of customers and that added functionality will help sell the product in markets outside of China, such as Japan.

At full capacity CC1 will need about 15m kg milksolids or 180m litres of milk annually, the output of 45 large Canterbury farms.

Canterbury has nearly 1200 herds and produces about 400m kg MS a year.

Fonterra said annual mozzarella tonnage produced is not disclosed but it will be enough for 600m pizzas and half of all pizzas eaten in China are topped with Fonterra’s cheese.

Clandeboye C2 and C3 produce mozzarella cheese in one day, packed and stored by individually quick-frozen (IQF) technology versus the traditional three months.

At the start of the C3 plant build Spurway said it was the biggest single investment in food service capacity on the way to expanding the food service division to $5b a year revenue by 2023.

Referring to the FY2017 figures, he said consumer, food service and advanced ingredients account for 43% of the co-operative’s output, showing it has made good progress into added-value products.

All Fonterra’s food service processing capacity is in New Zealand, supplemented by small amounts of co-manufactured supplies in offshore markets.

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