The $80 million joint venture between The Midfield Group and Louis Dreyfus Company will primarily export the powdered product, but managing director Daniel Aarons said there was also a viable domestic market among re-processors.
Mr Aarons said the plant had pre-sold two years’ worth of milk powder for export into Asia, as well as building a domestic market.
From cow to confectionary
Union Dairy has been sourcing milk from across the south-east of South Australia and western Victoria.
Mr Aarons said the company had secured some but not all of the milk it needed to become fully operational in about two weeks’ time.
“We are not cold-calling on farmers. We are responding to inquiries,” he said.
Union Dairy is offering farmers a generous deal compared to their competitors, with an opening price of $5.50/kg of milk solids plus a sign-on bonus of 25 cents per kilogram.
Peter Brady is a dairy consultant working with the plant on producing the milk powder.
“Milk from a cow is about 87 per cent water. We put it through an evaporator under vacuum and heating, then we take it to 48 per cent water, 52 per cent solids,” he said.
“From that step we put it into a spray dryer under pressure in very small droplets, and spray those droplets in very hot air.”
Mr Aarons said in the future, re-processors would become the company’s major market.
“Those that are using powders to make ice-cream and confectionary are presently importing powders,” he said.
“Fundamentally a lot of re-processors would like to source powders from known sources.
“Our view is [that] the future is about developing relationships with re-processors where they come to our plant, they audit the plant and they verify that we meet their quality standards.”
A view to collaborate
In December 2014 meat processing company The Midfield Group bought the former Safries factory site near Penola to diversify into dairy processing.
Mr Aarons said the original plan had been for the McKenna family behind The Midfield Group to go it alone.
“We were approached from upwards of 10 different firms to co-invest in the plant,” he said.
Later, international agricultural merchant and commodities trader Louis Dreyfus Company joined the venture.
“After some deliberation and contemplation and learning how the industry works, we decided that there was some merit in bringing on a partner who had knowledge of how the global commodity markets work, in particular, marketing of dairy products,” Mr Aarons said.
“This isn’t a business you enter to make your millions in the first one or two years. It’s a long-term investment.”
Getting up and running
The Midfield Group said the plant would create more than 40 ongoing jobs.
Site maintenance manager James McGregor said staff had been recruited from a range of industries.
“Some have come from the timber industry, one bloke from another powdered milk plant and one from a wind farm,” he said.
Mr Aarons said time and resources had been spent making the South Australian processing plant energy efficient from the beginning.
“Electricity prices are a concern for any industry in Australia,” he said.
“Generally speaking, a milk plant like this is going to consume a great deal of chilled water.
“What we’ve done here is bought in an ice bank in order to run compressors at night.
“We generate about 70 tonne of ice and then during the day we melt that ice down without electricity in order to produce chilled water.”
Source: ABC Rural