Open Country Dairy’s board has given the green light for the project at Horotiu; OCD is majority-owned by Talley’s Group, which also owns Affco Meat, headquartered in Horotiu.
OCD suppliers learned of the expansion during a round of supplier meetings this month.
In the monthly newsletter to farmer suppliers, OCD chief executive Steve Koekemoer told suppliers that groundwork on site will start shortly.
“This expansion will provide more capacity for us in Waikato and more options for the milk we process,” he says.
The new plant is expected to give OCD more flexibility in its product mix. Primarily a cheese producer, OCD also makes whole milk powder, whey protein concentrate and anhydrous milk fat for export.
Koekemoer told suppliers that while cheese has been its priority product, there are signs the EU is getting more aggressive on cheese prices.
“We are also aware of US cheese stocks building, which may put pressure on prices over the following months,” he says.
“We stand behind the superior quality of our award winning cheese and drive the premiums wherever possible.”
Prices for fat products such as AMF have continued at record levels, but to make these products OCD needs to produce skim milk powder (SMP). On the GDT Event SMP is currently trading US$1000/tonne lower than WMP, which negates the high AMF pricing.
Also, there is still at least 350,000t of skim milk powder in the EU intervention stock from the previous season and 472t of new stock has just been added for this coming season.
Koekemoer says this indicates there will be no short-term recovery for SMP and that the differential for WMP and fat prices will remain for a while.
“Open Country Dairy’s future will rely on the ability to have more flexibility on product mix, to remain competitive and move with the market.”
OCD chairman Laurie Margrain was busy last week and will talk to Dairy News this week about the project.
OCD has three plants -- in Waharoa, Awarua and Wanganui. Talleys owns 75% of OCD, Singapore-based Olam International owns 15.19% and Dairy Investment Fund Ltd is the third largest shareholder owning 6.7%.
Milk supply recovers
Open Country Dairy says milk supply has recovered extremely well over the past couple of months across all three sites.
OCD chief executive Steve Koekemoer says this has brought the overall season back on budgeted volumes after the massive drop over the peak.
“It must be a relief for many to see the season end with good milk volumes and at current price levels,’ he told suppliers in the monthly newsletter, TalkMilk.
Commenting on dairy prices, he said while prices recovered some lost ground, it wasn’t enough for OCD to achieve the current Settlement Period 3 forecast. OCD hopes to pay its suppliers $5.75 to $5.95/kgMS for this season.
The company is the process of finalising its opening forecast for next season.
Koekemoer says its analysis still indicates a trend of the supply and demand gap closing- a positive sign.
“This analysis assumes no further considerable increase in global supply above what we have forecasted at this point. A stable FX rate around US70c since our last update is another positive indicator for next season.”
