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.
Foundation site works are now underway.
Milk supply manager David Williams could not say how much milk the plant will initially take but Synlait expects to sign up about 80 supply farms in Waikato, probably soon now the start date is known.
“We’ve had a positive response from dairy farmers looking to supply Synlait, so we’re confident of securing sufficient milk for the 2019-2020 season,” he said.
“This was reinforced at Fieldays [where we met] passionate dairy farmers serious about doing more with their milk and adding value onfarm,” said Williams.
Asked how Synlait would compete for supply in Waikato, Williams said it would be by adding value beyond the farmgate.
“That’s giving farmers the opportunity to earn more from their milk through the Lead With Pride programme and the supply of A2 milk.”
Lead With Pride is Synlait’s best-practice programme under which farmers are audited and certified to meet its standards and are paid a premium for their milk.
“What we’re doing doesn’t appeal to every farmer but there is a specific group of farmers passionate about environmental sustainability or animal welfare or A2 milk. This is going to appeal to them as a way of getting value for doing those things.”
Pokeno will be Synlait’s first foray into raw milk collection in the North Island, although it already runs a blending and canning plant in Mangere -- which Pokeno will supply -- and a research facility in Palmerston North.
It will pay the same base milk price in both islands, said Williams.
Meanwhile, the planned capacity of the first spray dryer at Pokeno has been increased to 45,000 tonnes from 40,000t because of forecast customer demand.
The first dryer will be able to make a full range of nutritionally formulated powders including infant-grade skim milk, whole milk and infant formula base powders.
The plant is costing about $250 million excluding the land previously acquired. Synlait says it will fund it by cashflow and larger bank revolving credit.
“Our immediate focus is on establishing the nutritional spray dryer and associated services, including a wet-mix kitchen and warehousing,” said chief executive John Penno.
Synlait Pokeno will first make infant-grade ingredients, and is seeking registration to make infant formula base powder.
