What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
A new drier commissioned at the plant enables product at Pahiatua to effectively triple to 3.8 million litres daily.
Fonterra’s managing director of global operations, Robert Spurway, says the Pahiatua plant will keep producing whole milk powder (WMP) while new value add products are made at other plants.
“The milk for this plant comes from the local region. If you were to draw a circle it’s about a 70km radius from Wellington right up the East Coast to Wairoa. This plant has reduced the amount of milk we have to send through to the Whareroa plant in Taranaki, and most importantly it’s giving us more choices about what we make through the peak of the season at other plants; we haven’t always been able to [do that] in the past.”
Spurway says the Pahiatua plant was built mostly for milk already being supplied to the co-op, but they were under pressure at the peak.
Now the increased capacity in the lower North Island will enable Fonterra to optimise the value of farmers’ milk and add the most value year-long.
“On top of that these plants are amongst the most efficient in the world so as well as bringing on extra capacity that meets our strategic requirements we reduce our cost base and become more efficient through these sorts of expansions,” he says.
Spurway says Fonterra is pressing on with plants that produce added value products -- UHT products at Waitoa, mozzarella at Clandeboye, cream cheese at Te Rapa and sliced cheese at Eltham.
The Pahiatua plant is described by Spurway as close to a replica of its new plant at Darfield, Canterbury. The co-op has learned from building that facility; in fact Pahiatua was built slightly faster and slightly under budget as a result.
“It has slightly different design aspects at the foundation level -- isolators because of earthquake risk in this region relative to Canterbury. But above the ground the design and technology are almost identical to Darfield.
“The people building these plants and, most importantly, commissioning and running them are getting better at it each time. So far this plant start-up has exceeded our expectations.”
The reason for the earthquake strengthening at Pahiatua surprises many people, Spurway says, noting that 18 months ago a big earthquake struck and damaged nearby Ekatahuna.
The new Pahiatua plant is now processing 3.8 million litres of milk per day, up from just 1.4 million a few months ago. It operates 24/7 and every hour 15.5 tonnes of WMP are produced for sale in such markets as Cuba, Sri Lanka and Venezuela.
New water recycling technology is making a difference, says Bill Boakes, operations manager.
“The water we are taking out of the milk here is cleaned and used as potable water in the process. That’s the first time it’s been done in a dairy plant in NZ, though it’s done elsewhere in the world,” he says.
A waste water plant treats any water that cannot be recycled. This is then sprayed onto three nearby Fonterra farms where nitrogen and other loadings are monitored.
One hundred and eighty staff now work at Pahiatua, of whom 45 have jobs as a direct result of the upgraded. The new plant took about 800,000 hours to build.
