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.
The plant was commissioned last week and will supply Woolworths Select own-brand milk in Victoria for 10 years.
Fonterra Australia managing director Judith Swales says the plant starts a new era at the Cobden site – “an important milestone for our Australian business and a key pillar of our strategy”.
The plant expansion will generate 50 new jobs and benefit the local community and the co-op’s farmers. It will process up to 100 million litres of milk each year.
The long-term agreement with Woolworths provides certainty for our farmers that they will have a home for their milk, says Swales.
“Everyone involved in the Cobden expansion has done an exceptional job readying the site.”
Over the next four weeks the plant will increase production of Woolworths Select milk for sale across Victoria. It will be officially launched in September.
Australian dairy farmers have welcomed the commissioning of the plant.
Australian Dairy Farmers (ADF) president Noel Campbell says he expects the benefits of the long term contract to flow through to the farmers’ bottom line.
“The duration of Woolworth’s commitment with Fonterra Australia is welcome. Retail contracts with this sort of longevity provide milk processors with the security and certainty they require to invest in the industry’s capability and growth.
“The ten year contract also gives Fonterra the option to provide longer term contracts to their suppliers. Farmers are always more willing to invest onfarm when they have a certain destination for their product.”
Campbell says ADF would continue to monitor farm gate returns for farmers supplying fresh milk contracts and he encouraged all Australians to buy branded products to support Australian dairy farmers.
