Tatua's just too-good
OPINION: Earlier this month, small Waikato milk processor Tatua reminded the country that it’s still number one when it comes to paying farmers for their milk.
McGilvary says his nine-year term as head of the independent processor at Morrinsville has been an enjoyable one; not only has Tatua topped the payout stakes among processors every year, the co-op’s milk supply base has grown from 12 million kgMS to nearly 15.2m kgMS this season.
And importantly, milk quality has been maintained; Tatua suppliers have an average somatic cell count of 130,000 against the industry average of 200,000.
During McGilvary’s tenure, the company has doubled staff numbers from 180 to 370. A new food production facility was added in 2010-11 and a new specialised powders dryer in 2014-15. A $7 million wastewater treatment facility is now under construction.
Tatua also opened two international offices, in Shanghai and the US, to complement its Tatua Japan office. McGilvary says China now accounts for almost 20% of Tatua’s sales, as does Japan. The US accounts for about 12%.
It wasn’t all plain sailing though for McGilvary; in 2014 a blackmailer mixed highly concentrated 1080 poison with baby milk formula and posted packs to dairy co-ops and to Federated Farmers, with a letter demanding the country stop using 1080 or he would release poisoned infant milk powder into the Chinese market and one unspecified market.
Those were challenging times for the dairy companies, says McGilvary.
“We had to assure our customers that we had processes in place to ensure the integrity of our products.”
As part of its response to the 1080 incident, Tatua has spent $1 million on a new security system; it includes a perimeter fence around the factory at Tataunui and controlled entry points throughout the factory.
The DIRA regulation review and an end to 50 million litres of milk supplied by Fonterra was also a challenge, but Tatua suppliers grew their milk supply to offset the loss of DIRA milk.
McGilvary says the co-op has a great working relationship with other dairy processors; it trades raw milk with other independent processors Open Country Dairy and Miraka.
Under McGilvary’s watch Tatua has grown its specialised added value business -- nutritional ingredients like hydrolysates, lactoferrin and phospholipids. It is a key supplier of dairy peptones to global customers; peptones are used in vaccines and probiotics. It is the only casein and lactalbumin peptone manufacturer fully integrated back to the raw material milk source.
Its food service business includes dairy whip catering, cream, sauce and soft serve ice cream. For consumers, it produces whipping cream and cheese sauce.
McGilvary says while Tatua has focused on growing its specialised added value business, its overall performance is the primary reason for its success.
“As a cooperative Tatua focuses hard on wringing the highest performance possible from its capital investments and it has retained money from payouts to ensure it maintains a strong balance sheet to time sales and capture opportunities.
“Customers, farmer suppliers and staff are the heart of Tatua and each of these groups is critical to the company’s performance. I am proud of the relationships we have built and I am sure these will continue to be a strong focus after I leave.”
McGilvary has no immediate plans for the future. He will continue as a director of WEL Networks where he has served for seven years and will look at other opportunities as they arise.
“I have loved every minute of working at Tatua. I consider it a privilege to have led an iconic New Zealand company for nine years.
“All companies need a change at the top periodically to maintain the dynamism necessary for success to continue.”
