Divestment means Fonterra can focus on its strengths
OPINION: Fonterra's board has certainly presented us, as shareholders, with a major issue to consider.
Shanghai Pengxin owns the 13 former Crafar farms in the North Island; three of the farms supply the Maori-owned processor, the others supply Fonterra.
Shanghai Pengxin and Miraka last week announced an agreement with China’s largest dairy firm Mengniu that would fast-track expansion of the Taupo plant.
Miraka will supply branded UHT milk to the dairy giants for the Chinese market. The deal means Miraka’s plant, which can produce 240 million UHT packs annually, will reach capacity within two years, a year earlier than anticipated. The company is looking at quadrupling the plant’s capacity within five years, requiring more milk.
Shanghai Pengxin International chief executive Gary Romano told Rural News it can provide more milk to Miraka.
He says while Miraka has enough milk to process at the moment and a waiting list of farmer suppliers, his company was willing to send more milk to the factory; this may mean switching supply from Fonterra. “We are happy to supply Fonterra but we can always look at sending more milk to Miraka.”
China Mengniu Dairy Company is one of the largest dairy processors in the world and the owner of the biggest UHT brand in China.
Romano says Mengniu already has international partners, and its agreement to join with Shanghai Pengxin and invest in Miraka is a huge accolade for the company, the industry and the country.
“We have enjoyed a productive relationship with Miraka and are delighted that their innovation and commitment to quality has led to this acknowledgement by a world leader in dairying. This… will deliver tangible benefits to the Taupo region, to the New Zealand dairy industry and the economy and will benefit closer economic and cultural ties with China.”
Romano says the deal is a win-win for all players. “For North Island dairy farmers, there are more options to supply milk; for Miraka shareholders, this means extra profit and for Pengxin and Mengniu, it means quality New Zealand milk for its UHT brands in China.”
Miraka chairman Kingi Smiler says a $27 million UHT extension to its plant was commissioned in January this year, supported by a long term contract with Shanghai Pengxin.
Shanghai Pengxin also owns 13 dairy farms in the South Island and supplies Synlait; it is also awaiting OIO ruling on an application to buy the Lochinver Station, near Taupo, and develop farms.
