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.
Fonterra chief executive Theo Spierings says the new plant would enable the cooperative to meet growing demand for UHT products in Asia.
"The new plant will enable us to increase our UHT production by 100% over the next few years," Spierings says. "The plant will include five new UHT lines that will produce a range of products including UHT white milk and UHT cream for the foodservice sector.
"Products from the new plant will be bound for Asia markets and that will allow us to concentrate all our domestic UHT production – including Fonterra Milk for Schools – at Takanini in Auckland."
Spierings says together with the construction opportunities and the creation of an additional 50 jobs, the development would provide new opportunities for Fonterra farmers in the North Island.
"Milk supply in New Zealand is seasonal because it follows the grass growth curve. However UHT production requires year round milk supply so we will be talking to our farmers about the opportunity for more of them to take up winter milk contracts. This will enable them to take advantage of the milk price premium that these contracts include.
"A recent survey of our farmers indicated that a good proportion of them in the Upper North Island would be keen to take up winter milk contracts," Spierings says.
