60 jobs promised for Southland
Astate-owned Chinese company is investing in a Southland company to build a $200 million dairy processing plant with the promise of creating 100 new jobs.
Mataura Valley Milk has announced China Animal Husbandry Group (CAHB) will have a 71.8 per cent stake in the plant, 20 per cent will be held by Southland farm suppliers and the remainder by Hamilton-based milk powder company BODCO and Mataura directors.
The new plant, which is yet to be built, will manufacture infant formula, ultra-high temperature (UHT) cream and small amounts of skim milk powder.
CAHB’S investment in Mataura Valley Milk was approved by the Overseas Investment Office as well as the Chinese Government.
Based in Beijing and in operation since 1982, CAHB produces veterinary medicines, feeds, feed additives, herbages, milk powder, whey powder, pet food, and seeds.
It has annual revenues of $1.6 billion and more than 10,000 employees, and wholly or partially holds 10 subsidiary companies operating inside China.
BODCO, run by businessman Gary Mollard, already sells infant formula brands in China and is partially owned (40 per cent) by CAHB.
The plant, which is to be built just north of Gore on State Highway 1 starting in October, was first mooted in 2008, but with a different management and investment set up. Development was hit by the global financial crisis.
Of the promised jobs, 60 would be created in Gore and 40 in the BODCO business in Hamilton.
Gore resident and Mataura director Aaron Moody said the plant was designed to tap into the growing global demand for nutritional powders, especially infant formula.
Moody is a son-in-law of the former Mayor of Gore, Ian Tulloch, who became the largest Mataura shareholder in 2009 and remains as a director.
Moody said farmer suppliers had not yet provided any capital for the plant, which had received consent from the Gore District Council. Investment was being provided by CAHB, BODCO and Mataura Milk.
He did not say which company the farmers were currently supplying.
Federated Farmers spokesman Allan Baird said they were likely to be Fonterra suppliers because they would be cashed up after selling their shares. Open Country was the other player in the district, but less significant.
Baird said he was cautious about the proposal. ’’I’m concerned about the high level of offshore investment, I would have preferred to see it sourced more from local funding.’’
There was also ‘‘plenty of stainless steel’’ in Southland, with Fonterra’s Edendale drying plant not working to full capacity.
Gore District mayor Tracy Hicks said news of the plant was ‘‘massive’’ for the district, and would inject an estimated $90m into the local economy. ’’It’s fantastic to see this investment opportunity come to fruition. We haven’t seen that kind of investment here for a very long time,’’ he said.
Moody said most of the products from the plant were destined for the China-asia market, although the company did not want to be totally dependent on one region.
‘‘The global infant formula market was worth $57b in 2013, and the market in China alone is expected to reach $38b by 2017,’’ he said.
CAHB was importing some infant formula from New Zealand and was able to offer a distribution network throughout China.
Asked if he was concerned about the risks of dealing with a Chinese partner, Moody said there was risk in any market. ’’The relationship with CAHB provides us the confidence to proceed with the plant and excellent access to the rapidly growing demand in the Chinese market.
’’At the same time, 20 per cent of the company will be held by Southland dairy farmers who have the ability to meet Mataura’s raw milk and quality requirements, enabling them to be part of a valueadded business operating at the premium end of the market.’’ Moody said.
Invercargill Mayor Tim Shadbolt was delighted the project had found investors.
Despite the new plant being in the Gore district, the Southland and Invercargill districts were bound to prosper because of the interdependent nature of the region, he said.
‘‘When one benefits, in a way we all indirectly benefit.’’
Southland Mayor Gary Tong echoed Shadbolt’s comments, saying it would assist the Southland region.
‘‘It’s another industry in Southland that will be for the benefit of employers and the greater good of New Zealand.’’
Mataura Valley Milk has acquired 26.2 hectares of land at Mcnab and has obtained the necessary consents to build and operate a dairy plant.
Southland Regional Development Strategy (SORDS) governance group chairman Tom Campbell said the new plant was exactly the kind of development the group was looking for in the region.
Attracting major projects into rural areas away from Invercargill was difficult and its significant investment would have a big impact on Southland, he said.
He said the project could be expected to create indirect jobs as well as 60 direct jobs.
‘‘This is exactly what SORDS wants to happen.’’
Clutha-southland MP Todd Barclay called the investment a ‘‘vote of confidence in the industry and in Southland’’.
CAHB’S ‘‘cornerstone’’ investment in Mataura Valley Milk would give access to rapidly growing demand for nutritional powders in the Chinese market, he said.
‘‘We need to grow our valueadded dairy exports so I welcome Mataura Valley Milk’s announcement.’’
While Southland representatives were positive about the investment, NZ First leader Winston Peters called it a saddening pattern where offshore investors were coming into New Zealand and taking over its export industry.
In the space of three years Chinese investors had taken over the New Zealand infant formula industry and now companies wanting to export formula into China had to get Chinese government approval, he said.
‘‘This country built it’s dairy industry itself, it became world leaders all by itself ... the Chinese aren’t world leaders.’’
As a consequence, this deal was selling ‘‘our people and our interests’’ down the drain, he said.
‘‘I’m just very saddened to hear it, particularly of Southland which is one of our great export regions.’’