Maui Milk is seeking new suppliers of sheep milk located within two hours of Hamilton for a new supply agreement with Danone.
The $50 million dollar dryer, at Waikato Innovation Park, will be managed by Food Waikato. It has formed a new company, Melody Dairies Ltd Partnership, of which Pamu Farms (formerly Landcorp) owns 35%.
The venture has three other backers: Nu-Mega Ingredients (NZ), owned by Clover Corporation Ltd with a 35% share in Melody Dairies; Dairy Nutraceuticals Ltd (20%); and Food Waikato (NZ Food Innovation Waikato) with a 10% share.
The 1.2 tonnes/hour dryer is designed to meet strict infant milk formula manufacturing standards for sheep, goat, cow and specialty ingredients.
Pamu chief executive Steve Carden says NZ has plenty of big spray dryers for commodity milk but lacks smaller, speciality dryers that can manufacture small scale, novelty milks.
Carden says the investment will support Pamu’s strategy of adding value within and beyond the farmgate.
“For the last five years Pamu has been pursuing a strategic approach aimed at future-proofing the company by diversifying our earnings potential, and helping mitigate the commodity cycle that holds the company hostage to some extent. This investment fits with this strategy, and we expect it to contribute to the growing earnings and financial resilience of Pāmu in the years ahead.”
He said the move is also good for NZ’s growing, award-winning sheep milk industry, in providing “an additional option for drying the milk from our Spring Sheep joint venture, at a time when capacity for such specialist facilities is severely stretched”.
“We will also be able to access our share of capacity in the dryer for processing other specialist milks, such as our pure organic milk powder, which we are about to start selling in China.”
Carden says any capacity Pamu or its JV partners do not use can be on-sold to other users.
“This is good news for the Waikato region, the centre of our sheep milking and organic milk operations.”
Pāmu’s 35% stake in Melody Dairies is being financed through existing balance sheet capacity and is valued at $11 million.
Pamu owns 50% of Spring Sheep Milk Co, whose spokesman Michael Ahie welcomed the investment.
“Spring Sheep is growing as we see global customers start to recognise the unique taste and properties of our milk, and the provenance of the product. This investment will help secure the future of Spring Sheep.”
Construction of the spray dryer is expected to start this month for start-up by November 2019.
It will be built alongside the existing dryer and will have 2.4 times its capacity. It is expected to earn $129 million in exports a year.
The Food Waikato plant opened in May 2012 and the existing open-access development dryer is running at capacity, producing $51 million in export product for the year.
The existing dryer will remain available for new businesses and products, with increased capacity available as some clients switch to the new dryer.
A director of Innovation Waikato, and former chief executive of Dairy Goat Cooperative, Dave Stanley, says having Pamu as a cornerstone shareholder was critical to the new dryer venture.
“As innovators in farming, we value Pamu as a shareholder..”