Monday 18th Jun, 2018

Wattle outlines major new plant investment

Milk powder. Photo: Creative Commons / ProjectManhattan
Milk powder. Photo: Creative Commons / ProjectManhattan

Milk powder group Wattle Health plans to invest $63 million into a joint venture to build a milk processing plant at North Geelong.

Wattle on April 10 announced plans for an organic spray drying facility capable of processing up to 73 million litres of milk, which by standard ratios translates to up to 9,500 tonnes of milk powder, each year.

The plan is to build a plant beside an existing plant owned by the Organic Dairy Farmers of Australia, a Victorian dairy farmers co-op.

Wattle, which targets the enthusiastic Chinese market for Australian infant formula, will own 45% of the joint venture, while ODFO will own 50%, and the remaining 5% will belong to Niche Dairy.

Niche Dairy was a founding partner of the massive Blend and Pack dairy processing site south of Melbourne.

Wattle ($63 million) and Niche ($7 million) will fund the plant’s construction via secured loans. ODFO, meanwhile, will sign a minimum supply agreement for up to 46 million litres of fresh organic milk per annum.

The joint venture will be known as Corio Bay Dairy Group.

“The JV with ODFA has been a long time in the making and is consistent with Wattle Health Australia’s vertical integration strategy which is very important for the long-term success of the company,” Wattle co-founder and executive chairman Lazarus Karasavvidis said.

“This also gives [Wattle] the pathway to being a truly Australian organic nutritional dairy company which supports the local dairy industry.”

Niche director Andrew Grant said the partnership continued Niche’s development of a vertically-integrated business. “We are pleased to be involved in such an exciting development in the dairy industry,” he said.

ODFA boss Stewart Price said a key driver for the co-operative was to offer premium milk prices to its members.

“Importantly,” Price said, “this will enable our co-operative farmers to receive full organic rates year-round for every litre of organic milk produced.

“This is a step change for the organic diary industry and the farming families that are the backbone of our co-operative. We are very excited about this project as this completes our strategic focus to achieve a key relationship in each dairy category, and the future potential returns in the nutritional powder category that this JV will bring.”