Fonterra chief executive Andrew Ferrier says the world's largest milk-powder dryer – officially opened today at the cooperative's Edendale site near Invercargill – is keeping the nation's dairy farmers internationally competitive.He said the
Fonterra chief executive Andrew Ferrier says the world's largest milk-powder dryer – officially opened today at the cooperative's Edendale site near Invercargill – is keeping the nation's dairy farmers internationally competitive.
He said the $212 million plant – "the stainless steel, the huge cyclone, the kilometres of piping and the technological wizardry that sits behind it" – showed the company had a level of efficiency that no other dairy processor in the world could yet match.
"We can turn our farmers' milk into product more efficiently than any of our competitors," he said at the opening. The new dryer was providing top quality and a lower cost, while using less energy, and doing it faster than anyone else's factory.
The dryer, known as ED4, represented the future of the industry, he said. Capable of producing 27 tonnes of milkpowder an hour it will increase Fonterra's national production more than 10% to 1.1 million tonnes a year.
Keeping a step ahead of the competition gave NZ farmers an edge in an increasingly competitive global marketplace, Mr Ferrier said.
It was also a vote of confidence in the future of dairying for the region, which has produced 50% more milk over the past five seasons as farmers expanded production and converted more drystock farms to dairying.
The Edendale expansion followed growth of between 6-7% in South Island dairying during past year. The dryer has given Edendale a 30% boost in capacity.
"This plant will help us take advantage of the opportunities we're seeing in the global marketplace," Mr Ferrier said.
Demand increases
Overseas dairy demand was growing with trends toward healthy, naturally nutritious and convenient foods. The big food companies that Fonterra supplied were predicting growing demand for dairy, particularly in regions such as Asia.
Mr Ferrier said he expected dairy prices to ease, after lifting 95% in the first half of this season from their July 2009 low. Prices were likely to then stabilise then find a new level: "All of our long-term projections show healthy dairy prices," he said.
The ASB Bank reported this week that Oceania dairy prices – Australia and New Zealand – are being pressured by European prices.
Professor Bill Bailey, a former head of agribusiness at Massey University and now working in the US, said in the bank's commodities report that though all dairy prices had dropped over the past few months, the biggest loser had been European butter with prices dropping more than $US1000/tonne in less than two months.
Prof Bailey noted that a price drop of almost 2% in Fonterra's February auction of whole milkpowder, compared with January, included a sharp fall of nearly 7% for the most deferred delivery period, August through October.
Some commentators saw this as indicating a continuation of price declines, in contrast to Fonterra's belief the market is in balance at current levels.
