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.
It will allow the processing of an additional 4.4 million litres of milk each day, taking total daily processing capacity to 7.6m L.
Processing such large volumes is a resource-intensive business that needs careful handling, he says. “We focus on making sure impacts are minimised wherever possible.
“A new biological wastewater treatment plant ensures we can treat any waste [entering] potable water before it is irrigated to land near the site – the most environmentally sustainable solution.
“We’re making good use of rail to move product to port, eliminating up to 40 truck movements from the site every day, which free up local roads and reduce our carbon emissions.
“A by-product from the treatment plant is a high quality fertiliser used by local farmers.”
Larger scale dryers such as Lichfield are part of balancing Fonterra’s assets to give the best value for farmers.
“As we’ve seen in recent GDT auctions, premium milk powder is a valuable product for Fonterra in its own right. But people often underestimate the strategic importance of powder production to Fonterra’s overall asset mix.”
The new plant will help the co-op balance its processing, allowing it to switch between products quickly to meet demand changes in global markets, increase production when milk volumes dictate, and achieve the best product mix for returns.
