Fonterra reports price jump and reveals new plant plans

By Guy Montague-Jones

- Last updated on GMT

Related tags: Milk powder, Milk

Fonterra has unveiled provisional plans for a major new milk processing plant in New Zealand and reported a surge in dairy prices as production eases.

According to Fonterra executive Gary Romano, the project is likely to be one of the largest investments in manufacturing in New Zealand in the last five years.

“While it’s still early days, we expect the development would create more than 50 new permanent jobs, on top of the work the construction of the plant would provide for local businesses,”​ said Romano.

At this stage, Fonterra has taken options on land for the new plant and expects it to become operational in September 2012.

Once built, the plant will have capacity to process up to 2.2 million litres of milk per day - equivalent to 200 farms in Canterbury.

Options open

But the dairy company is still considering its options for the site. These include a milk powder plant – similar to its recently-opened drier at Edendale in Southland or a production plant for high-value nutritional milk powders.

The proposed plant is to be located near the small township of Darfield – about 45 kilometres from Christchurch.

Romano said: “Located at the heart of dairying’s growth in the region, this site would mean fewer tanker movements to collect our farmers’ milk, compared with taking it to another site for processing.

“Its close proximity to the Port of Lyttelton would also make transporting product for export more efficient.”

Price increases

In other news, Fonterra has just concluded its April trading event on its online auction trading platform, with the average price for whole milk powder up 21 per cent on March.

Prices of anhydrous milk fat and skim milk powder were also up by more than 20 per cent as overall prices across all three commodities rose 23.2 per cent.

Paul Grave, global​DairyTrade Manager, said demand across all products was very strong but said the April spike was due largely to tightening supply as the Australasian production season draws to a close.

Related topics: Markets, Fonterra, Pricing Pressures

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