New rival to take on world dairy market

By Chris Mercer

- Last updated on GMT

Related tags: Milk

One of New Zealand's leading meat processors plans to build a dairy
business capable of supplying markets around the world, offering
new competition to the established elite.

Affco, which has operated in New Zealand's meat sector since 1904, announced Monday it had formed a wholly owned subsidiary called Dairy Trust in order to enter the global dairy arena. The news could signal the emergence of a new competitor for some of the world's largest dairy firms, and especially Fonterra, the New Zealand dairy co-operative that has long held a monopoly in the country's industry. "New Zealand dairy products enjoy a first class reputation globally for quality and price competitiveness and the Affco board regard it as an attractive sector for investment,"​ said Affco chairman Sam Lewis. Affco already has an established international network, processing and exporting around 150,000 tonnes of meat to 74 different countries last year. The creation of Dairy Trust was made possible by new rules in New Zealand that allow dairy firms to operate independently of the country's powerful Dairy Board. For now, the firm is likely to begin small. It will take over three Affco sites to develop processing facilities and plans to buy another, non-Affco site, soon. "The company has a very simple objective of establishing itself as a long term and profitable participant in the New Zealand dairy industry through dairy processing,"​ said Lewis. Affco said New Zealand's heavy reliance on milk powder returns meant Dairy Trust would target this sector, but the firm added that "considerable work"​ remained to decide the exact product mix and scale of its operations. It is anticipated that Dairy Trust will list on the NZX stock exchange in 2008, a move that Affco says will allow greater public investment in the dairy sector.

Related topics: Manufacturers

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