Open Country opens butter plant
When American retail giant Cosco came to audit Open Country Dairy’s new butter plant at the Waharoa site and give the green light to supply their American stores, they allowed themselves a week for the exercise.
About 700 people – Tatua shareholders, staff, local dairy industry leaders and key customers from around the world – attended the event at Claudelands Events Centre.
Hosted by comedian Te Radar, the event reflected Tatua’s heritage and its success as an independent dairy processor.
Formed with 10 shareholders in 1914, Tatua is today owned by 87 farming families in and around Morrinsville. Last year the co-op achieved sales of $266 million and a record payout before retention of $10.32/kgMS.
Unlike most dairy processors in New Zealand, Tatua is not a major milk powder maker; instead it is a supplier of specialised ingredients and foods.
Answering questions from Te Radar on stage at the celebration dinner, Tatua chairman Steve Allen says it is a story of “unique interdependency” between farmers and staff.
“Milk is perishable so it goes off if not collected and processed. Our farmers milk cows every day and we have a wonderful group of staff who take care of the milk; they create value for us while looking after our customers. We need each other, we trust each other and over time we have built this wonderful business and loyalty just like a family.”
Allen says the most challenging time for Tatua was after dairy industry deregulation in 2001.
While most dairy companies merged to form Fonterra, Tatua was one of the few co-ops opting to remain independent. Prior to Fonterra, all dairy exports were handled by the NZ Dairy Board, a statutory body.
Allen says as an independent processor Tatua had to reorganise and dig deep to remain competitive.
At the same time, Tatua has maintained a working relationship with other big processors Fonterra, Miraka, Westland and Open Country Dairy. Fonterra chairman John Wilson and Miraka chairman Kingi Smiler were at the dinner.
For Tatua chief executive Paul McGilvary, the defining moment for the co-op was in the mid 1960s when the directors had to decide how to upgrade an ailing factory. They decided to spend 23,000 pounds from cash reserves to build an edible lactic casein plant. But no sooner was the plant completed than the NZ Dairy Board sent the co-op documents stating the best returning products were speciality powders, not edible lactic casein.
The directors were forced to go back to shareholders and admit they had been wrong. After lots of meetings, the directors got the go-ahead to build a 100,000 pound specialised product dryer. This launched Tatua on the path of specialised ingredients, says McGilvary.
“Without that decision, which was made under some duress, we would not be doing specialised products; that was a defining moment for the company.”
Tatua is building a $65m specialised powders dryer – its third dryer – that will be commissioned early next year. Most of the specialised foods will be exported to Japan, China and other parts of Asia. Japan remains Tatua’s number-one market and the dinner was attended by many Japanese customers and staff.
McGilvary says without customers there is no business. While the connection between suppliers and staff is important, for the company the critical connection is between staff and customers. About 94% of Tatua products are exported to 60 countries.
A leading Tatua product in the domestic market is Dairy Whip – fresh cream in an aerosol can.
Allen spoke about the “long arduous process” to make Dairy Whip a best seller. Soon after launch in 1970s, Dairy Whip ran into trouble with some cans exploding in supermarkets. During tests at the company site, one exploding can landed on the roof of a trading store across the road.
Primary Industries Minister Nathan Guy spoke of the good times he had with Dairy Whip while growing up. “We never told our mum but my brother and I sprayed Dairy Whip into our mouths until we nearly exploded.”
Guy praised Tatua for growing from a modest company to an “iconic NZ company that started in 1914 with 10 shareholders; there was electricity in the factory and delivery was by horse and cart.”
The centenary dinner was the final part of the celebrations; the co-op launched a book, held an incorporation day for staff and suppliers and threw a party at its Tatua Japan office for staff and customers.
