Oceania Dairy Ltd has signed the first milk supply agreement for its new $214 million Glenavy dairy factory, and it’s with the original owner of the land where the factory is being built.
The agreement was signed with Aad and Wilma van Leeuwen, who represent a group of suppliers covering 20 individual farms.
The van Leeuwens sold the site of the Glenavy plant to Oceania Dairy which, in April this year, became a wholly-owned subsidiary of Inner Mongolia Yili Industrial Group (Yili), China’s largest dairy company.
Mr van Leeuwen said having the new plant built and being the first supplier was extremely positive.
“We’re very proud for the district and glad all the negotiation is over. There’s been a couple of months of negotiation,” he said.
“It’s impressive with the Chinese coming to town; it’s a big thing.”
All of the supplying farms are located on the northern side of the Waitaki River. Mr van Leeuwen, who has been dairy farming in the Glenavy/Morven area since 1993, said he would provide three million kilograms of milk solids from eight farms.
He said test runs would be made and he could start supplying milk as early as July 1, but it would be from August 1 onwards “for sure”.
Construction of the Glenavy processing plant is well under way. The plant has been designed for producing milk powder for export to China where it will be used by Yili to make infant formula.
Aidan Johnstone, Oceania’s chief executive, said he was delighted to have contracted the van Leeuwens as the first milk suppliers.
“They are industry leaders and excellent farmers. They typify the sort of suppliers that we are looking to work with,” he said.
Oceania will contract up to 40 local farmers for the 2014-15 supply season to deliver 130 million litres of milk. As the factory moves to full production capacity by 2016-17 it will process 300 million litres per year. That will generate 47,000 tonnes of powder for export each year.
The factory will employ about 70 permanent staff when complete, with most expected to be recruited locally.
By CHRIS TOBIN