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Fonterra chief executive Theo Spierings says the co-op is investing $750 million to lift processing capability over the peak processing months.
The co-op hopes to lift New Zealand processing capability by 8.2m litres/day by 2016; this includes lifting Litchfield plant's capability by 4.4mL/day, Edendale 1.4mL/day and Pahiatua 2.4mL/day.
Spierings says very strong milk flows and an extended peak season stretched the co-op's powders capacity and forced it to make lower-returning products.
"We fast-tracked investments to expand our New Zealand capacity and undertook immediate projects to maximise output from existing plants," he says.
"As these have come on stream we have announced further investments to keep us ahead of the milk curve and provide more options for the most profitable end use of our farmer shareholders' milk.
"This gives us more flexibility with what we make and where we make it and lifts our operational efficiency."
Spierings says Fonterra can meet customer demand and keep its farmgate milk price competitive by having New Zealand sites focus as much as possible on products with higher stream returns.
Apart from investment in processing capability, the co-op has also spent $260m on plants supplying products to the foodservice industry.
About $72m was spent at the Clandeboye plant in Canterbury to double grated mozzarella capacity.
At the Eltham site, $32m was spent on boosting slice-on-slice cheese making; at Te Rapa another $32m was spent on cream cheese production.
OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.
Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.
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