NEW ZEALAND – Fonterra, a New Zealand multinational dairy cooperative, plans to stop milk powder processing at its Brightwater plant near Nelson by April 2023.
The dairy giant announced that it would shift milk processing from the small aging plant at Brightwater to its bigger Darfield site near Christchurch.
Milk collection and associated activities would continue at Brightwater even as Fonterra is in the process of also changing the milk transfer activities from Tuamarina to Brightwater.
Fraser Whineray, Fonterra’s chief operating officer, stated: “This, along with forecast capital and maintenance costs, means we have made the tough decision to close our milk powder plant at Brightwater.
We are continually working to ensure our assets across the country are as efficient as they can be, changing product mixes, and moving more milk into value-add products.”
The reshaping of business activities by the dairy is part of the preparation for a future of flat or declining milk supply.
However, New Zealand’s dairy giant noted to have plans that will enable it to extract more value from each drop of milk supplied and optimize its plants to match both consumer demand and available milk supply.
As part of its long-term strategy to extract more value, Fonterra plans to direct more milk into its food service and consumer business, less into ingredients, and, in some cases, divert product away from Global Dairy Trade auctions.
Fonterra to curtail operations in Sri Lanka
Meanwhile, Fonterra has said it will continue its operations in Sri Lanka but in a limited capacity as the nation is reeling from economic chaos and political turmoil.
Historically, Sri Lanka has been a good performing market for the co-operative that has one manufacturing facility that supplies two top consumer dairy brands in the country – Ratthis and Anchor brands.
The company’s spokesperson said, the country’s economic crisis has hurt Fonterra, as the rapid drop in the value of the Sri Lankan Rupee made it harder to pay for products, which are priced in US dollars.
In its third-quarter update in May, Fonterra detailed the country’s economic crash has resulted in US$81 million in an adverse revaluation of its Sri Lankan business payables owed to New Zealand.
The company further noted the amount may continue to vary as Sri Lanka’s currency continues to fluctuate.
Fonterra’s Asia Pacific chief executive Judith Swales stated: “We are continuing operations, albeit at limited capacity, and doing our best to make food nutrition available.”
Swales noted that even in difficult times, Fonterra’s Sri Lanka team was continuing to get new products to market, having recently launched a new tea innovation.
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