Milk Glut Drags Fonterra Forecast Down to $9.20/kgMS
A milk glut around the world shows no sign of easing, putting downward pressure on farmgate milk prices for the next few months.
Robert Spurway, chief operating officer global operations, says this rise shows the shift in food preferences in China and wider Asia.
“Much of the demand we’re seeing for mini-dish butter is from hotels, restaurants and commercial kitchens in China – all out-of-home eating places where consumers are choosing dairy.
“Many of these markets have in the past trended towards non-dairy creams and spreads; now we’re seeing a desire for natural dairy in food preparation and at the table.”
The foodservice aspects are important, the co-op says, but more interesting is consumers daily choosing more dairy.
Consumer and foodservice volumes in China grew 40% in the financial year to date versus the same period last year.
Recent butter imports have grown 20% annually -- from 17,000 tonnes in 2009 to 63,000t in 2016.
“Recently we’ve seen demand, particularly from China, exceed supply,” says Spurway. “So this expansion is in response to the market -- investing in capacity and delivering on our value-add strategy by converting more milk into higher-returning products.
“It will also give us more choices in the products we’re able to make so we can be more responsive to our customers.”
The expansions will see Te Rapa go from six cream product lines to eight, and butter production at least double from 250 million to 650m mini-dishes per year.
The additional cream cheese line will increase plant capacity from 30,000t to 33,500t per year, and add capability to make 5kg blocks in addition to the 20kg ones now produced.
The Te Rapa factory was built in 1967 for powder drying.
The cream plant was built in 1997 to make consumer and bulk butter and cream cheese. Another cream cheese line was added in 2013.
Te Rapa employs about 500 staff and makes 80,000 tonnes of cream products per year.
