RISEN FROM THE ASHES

Farm­ers sign up to sup­ply Stan­hope cheese plant .

Dairy News Australia - - FRONT PAGE - STEPHEN COOKE

THE OPEN­ING of its new Stan­hope cheese mak­ing fa­cil­ity en­abled Fon­terra to lift its open­ing price from $5.30 kg/milk solids (MS) to $5.50 kg. It un­der­pins the im­por­tance of the fa­cil­ity to Fon­terra’s growth in Australia. The New Zealand com­pany has at­tracted 50 farm­ers from north­ern Vic­to­ria, most of which came from Mur­ray Goulburn. Fon­terra lifted its price to $5.50 once it knew it had the milk se­cured to sup­port cheese pro­duc­tion. The new fac­tory has a ca­pac­ity 50 per cent larger than the old fac­tory burnt down in 2014. The ad­di­tional milk means the new plant can be run at full ca­pac­ity — pro­cess­ing 1.3 mil­lion litres a day, run­ning 24 hours a day. The new plant re­turns moz­zarella pro­duc­tion to Australia for the first time since 2013, help­ing to cap­ture grow­ing de­mand for cheese both domes- tically and across Asia, par­tic­u­larly in China and Ja­pan. Fon­terra chair John Wil­son told those at the launch that the com­pany’s cheese, whey and nu­tri­tion­als strat­egy, based in Australia, “is crit­i­cal to the growth and drive in de­mand that is re­quired from an in­creas­ingly de­mand­ing con­sumer base glob­ally”. "Global dairy de­mand is very strong, it is driven by the de­mand for high-qual­ity nutri­tion, par­tic­u­larly into de­vel­op­ing mar­kets,” he said. "But dairy­ing is very volatile. “World prices move very, very quickly when sup­ply and de­mand is rel­a­tively bal­anced, and it doesn’t take much to cre­ate sig­nif­i­cant un­cer- tainty in the dairy cli­mate. “Re­cently I’ve been with farm­ers in Europe, the US, South Amer­ica, and home in New Zealand and here in Australia, and ev­ery sin­gle one of those farm­ers has had to deal with ex­treme volatil­ity and have had to adapt their busi­nesses to do so. "The chal­lenge for us and the chal­lenge that we take on very strongly is to con­tinue to build in­no­va­tive plants, putting more and more prod­uct into food ser­vice, con­sumer and so­phis­ti­cated in­gre­di­ents to en­sure we can de­liver the best prices to our farm­ers. “But ul­ti­mately I need to say prices will be volatile.” Mr De­doncker said the key driver for Fon­terra in the Aus­tralian mar­ket was that it was “a re­ally di­ver­si­fied busi­ness”. It of­fered a di­verse port­fo­lio of pro­duc­tions into three dis­tinct chan­nels — re­tail, food ser­vice and in­gre­di­ents. “If you are fo­cused on one prod­uct only with one trade chan­nel only, you have a real risk in your busi­ness sys­tem,” he said. “We don’t. “We have three mas­sive chan­nels that we can send prod­uct through and we have at least four dif­fer­ent prod­uct cat­e­gories.” “Fon­terra cheese al­ready tops more than half the piz­zas made in China, and now we will be send­ing Aus­tralian-made moz­zarella to cater for grow­ing de­mand.” Mr De­doncker said 40 per cent of peo­ple in ur­ban China eat at West­ern-style fast food out­lets once a week, and the use of dairy in food­ser­vice has grown by over 30 per cent in just five years. “This growth has been helped by de­mand for cheese — as dis­pos­able in­comes rise the din­ing-out cul­ture is grow­ing, par­tic­u­larly for pizza. “In Ja­pan, cheese con­sump­tion is ris­ing by 3 per cent each year, with huge po­ten­tial for growth. “Ja­pan is the world’s se­cond-largest im­porter of cheese, with Australia their num­ber one sup­plier — they’re our big­gest mar­ket for cheese.”

Fon­terra lifted its far­m­gate price to $5.50kg once it knew it had the milk se­cured for its Stan­hope fac­tory.

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