Week of July 10, 2000
  Blockbuster Deal of the Week
   from Site Selection's exclusive New Plant database

New Zealand Dairy Board Building $50 Million Plant,
Milking EU for More Business

Got milk? New Zealand certainly does. And soon it will have more, which it's anxious to share with the world.

The New Zealand Dairy Group (www.nzmilk.co.nz), the nation's largest dairy cooperative, has just announced that it will build a US$50 million milk powder plant at its Clandeboye site near Timaru in the South Island. New Zealand Dairy Group officials say the plant will process up to 924,702 gallons (3.5 million liters) of milk per day and produce up to 14.9 tons (13.5 metric tons) of milk powder per hour.

Clandeboye Will Become
Dairy Board's Biggest Manufacturing Site

New Zealand Dairy Chief Executive Graeme Milne says the expansion will be complete by September of 2001. With the expansion, Clandeboye will become the company's biggest manufacturing site, with a total capacity of almost 2.38 million gallons (9 million liters) per day, Milne said. New Zealand Dairy Group's decision to expand its Clandeboye operations, company officials explain, was prompted by projected milk-growth consumption in the South Island, plus five-year industry forecasts that show milk powder as the highest-returning product mix (followed by protein and cheese).

Dairy Board officials have not as yet revealed a figure for how many jobs the new plant will create. They did, however, say that the expansion will include a major upgrade in technology. Part of the project includes two new evaporators that will enable the new plant, as well as the existing 14.9-ton (13.5-metric-ton) milk powder drier at Clandeboye, to run 24 hours a day, company officials said.

Dairy, New Zealand's Top Export,
Enjoying Increased Earnings

Dairy products are New Zealand's top export by volume and value. And despite lower average prices for international commodities, the Dairy Board has enjoyed strong economic fortunes lately. Two years of increased payouts, combined with the nation's record milk production, has led to a milk value of $1.22 billion for the New Zealand dairy industry. The most recent seasonal figures show an increase in the New Zealand dairy industry's earnings of more than $235 million over the previous season.

"This excellent outcome" was the result of favorable currency movements and strong profit performances from both the Dairy Board's strategic business units, commented Dairy Board Chairman Graham Fraser at the end of May as the most recent seasonal figures were disclosed. Fraser said New Zealand Milk Products, the Dairy Board's ingredients business (of which the Clandeboye operation is part), is forecast to achieve a profit of $150 million for this fiscal year, an $37.5 million increase over the previous year.

Dairy Board Getting
More Aggressive in the EU

Agriculture has long been the backbone of New Zealand's economy. In the 19th century, the New Zealand economy was developed almost entirely on the export of primary produce and minerals (principally gold) to Europe and North America.

But it was the arrival of refrigeration in the 1880s that enabled New Zealand's meat and dairy products to complement wool and gold as the prime generators of export income. Today, New Zealand has some 3 million dairy cows (compared to 3.5 million humans), and 92 percent of the milk they produce is processed for exports.

Dairy Board Chairman Fraser underscored the nation's historic and ongoing export push during a whistle-stop tour of European Union (EU) capitals in early June.

Fraser announced the relocation of the Dairy Board's European ingredients business to Germany. He also announced a significant reinvestment in the Anchor business in Britain. Most of all, Fraser emphasized that the Board was now "more committed than ever" to being a long-term player in the EU.

"We are actively investigating opportunities inside Europe and around the world to work with European partners to grow and diversify our business," Fraser said. "A representative office has just been set up in Brussels to strengthen our communication.

"We are already a major participant in the [EU] market as an employer, investor and producer of technology. We are increasingly buying, processing and exporting European product and have every expectation that that business will grow," he added.

Speaking in London at the end of the whistle-stop tour, Fraser acknowledged that times were particularly tough for British dairy farmers. The dairy market is changing rapidly throughout the world, he asserted. Consolidations of dairy processors, intense price pressure from retailers and the faster pace of business were challenges that all farmers are facing, he explained.

Those changes are also having a major impact in New Zealand, Fraser added.

New Zealand's dairy industry is undergoing a major structural change, he explained. The nation's number of dairy co-operatives, for example, has plummeted from 20 years ago's total of 30 to only seven today, he said. New ways of integrating the nation's dairy manufacturing and marketing are actively being explored, Fraser added.

©2000 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.