Three years ago, a new dawn for the Māori dairy industry was conceived in the Bay of Plenty town of Kawerau - an association of Māori-owned businesses with the goal of boosting employment and focusing on kaitiakitanga, or the guardianship and conservation of the land.
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(Photo / NZ Herald)

The establishment of Waiū Dairy was the result of a brainwave dreamt up in a hotel bar by a group of local Māori business minds.

The project quickly grew to become an association of 11 whānau, hapū and Māori entities, all investing in the company.

The group partnered with Cedenco, the local subsidiary of Imanaka – a Japanese food giant. Cedenco took the remaining 33 per cent share in the company.

Under the shadow of Mt Pūtauaki, the plan was to create a processing plant relying on geothermal energy, producing a mix of both organic and conventional milk products.

In putting together plans for the plant, the partnership of the two groups also sought backing from the government’s Provincial Growth Fund, receiving a $4.9m loan, announced by then-Deputy Prime Minister Winston Peters in 2020.

But after just a few years in operation, the company has ended up in court after hiring a trucking company to dump seven million litres of e.coli-riddled wastewater at farms across the region; breaches that the regional council says should be seen as an example to potential rulebreakers.

“We have a vision that is not just generating profit, not just being kaitiaki of the land, but also generating a sustainable outcome.”

Those were the words of Waiū Dairy CEO Samuel Mikaere, speaking to Māori Television shortly after the opening of the plant in 2019.

Waiū Dairy CEO Samuel Mikaere apologised to the Kawerau community, saying the offending didn't align with the values of kaitiakitanga.
Waiū Dairy CEO Samuel Mikaere apologised to the Kawerau community, saying the offending didn’t align with the values of kaitiakitanga. 

This week, the same man is now apologising for his company’s conduct after being hit with a $49,000 fine.

“Waiū apologises to our community for the events that lead to the prosecution and offer that the events that transpired do not represent the values of kaitiakitanga which are very important to the whole team at Waiū Dairy.”

Toi Kai Rākau Iti, the local Bay of Plenty Regional councillor representing the Kōhi constituency, has labelled the offending as “disappointing” saying the land must be looked after for future generations.

“Enterprise like Waiū bring jobs and other economic benefits to communities like Kawerau, communities that need them most. But, this must be balanced against the environmental impact.

“It is the role of our council to regulate this space to ensure that these impacts from industrial activity are kept at sustainable levels and within hard limits. We do this for the benefit of present and future generations and the Taiao [natural environment] itself.”

The $33 million dairy factory with nowhere to pump wastewater

The construction efforts for the project were significant; once completed, the facility was ready to produce a mix of milk powder and butter, predominantly for export to the overseas market, trading on the New Zealand brand.

However, with the large-scale operation came a significant amount of wastewater – approximately 320,000 litres per day.

That wastewater was contaminated with a variety of substances, including nitrogen, phosphorus and sodium, as well as high in E. coli levels.

Conveniently, the factory is located just a kilometre away from the Kawerau District’s water treatment plant, with the company originally intending to pump it there, without keeping any on-site.

But shortly after entering operation, the council began to raise concerns about the quality of the wastewater.

A year after the factory first entered operation, the council issued a trade waste consent; an order for the company to reduce the contamination of the wastewater, or find somewhere else to dispose of it.

Waiū attempted to comply with that order, but within a month it was clear that it wasn’t able to meet the requirements set out by the council.

The plan to dump the water

It came up with a new plan to truck the factory’s wastewater to farms, where it would be discharged onto paddocks with the farm owner’s consent.

Parts of the eastern Bay of Plenty were experiencing drought conditions during the period of offending, making the offer of irrigation attractive to farmers.

On August 21, Waiū Dairy’s general manager emailed the Bay of Plenty Regional Council, asking for a “pardon” period where the company could undertake its plans without any threat of prosecution.

The company contracted Langford Transport to move the water between sites. Owner Clyde Langford had significant experience as a trucking operator, including in agricultural settings.

Just under a month later, the regional council organised a meeting with the company to work out an arrangement for the wastewater. The council made clear that there would not be any grace period for unlawful discharges.

However, it was determined that the company could apply for consent for its trucking plan, with appropriate restrictions and monitoring requirements in place.

A Bay of Plenty Regional Council officer collects a sample of wastewater for testing. The water was found to contain e.coli levels of 420 million cfu/100ml. Photo / Supplied
A Bay of Plenty Regional Council officer collects a sample of wastewater for testing. The water was found to contain e.coli levels of 420 million cfu/100ml. Photo / Supplied 

Unbeknownst to the authorities, on September 29 the company began discharging its wastewater at a nearby farm. Eleven days later, 16 truckloads had been dumped there.

In the following days, the council was copied into an email from two Waiū Dairy consultants confirming that the discharges had already begun without consent.

The officers travelled to the factory, where they were told the latest plan was to discharge the wastewater at the two farms. The company said that Clyde Langford had made arrangements with the farmers.

Waiū Dairy believed it had already gained consent to discharge the wastewater, through an existing resource consent held by the property where they were discharging the water.

That day, officers also spoke with Langford. He told the officers that discharging a truckload of water typically takes around 20 minutes.

Officers collected samples of the wastewater being loaded into the tanker, which found that the water had faecal coliform levels of 580 million cfu/100ml and E. coli levels of 420 million cfu/100ml.

Water with contamination at that level was described by Victoria University freshwater ecologist Dr Mike Joy in an interview with Open Justice as “off the scale”, and if it had found its way into a waterway, the consequences could have been significant.

Enforcement action begins

On November 5, regional council officers sent an email to Waiū Dairy, informing them that the consents they were relying on did not cover their activities and that any discharges of the water were illegal.

Eleven days later, the council received a complaint from a member of the public, complaining of a bad smell emanating from “a substance drained by a truck”.

That same week, a regional council officer visited one of the farms where the water was being dumped, meeting with Waiū Dairy’s general manager Philip O’Reilly.

At that meeting, O’Reilly admitted to the council officer that “all persons involved know that the wastewater discharging activity is illegal”.

O’Reilly attempted to alleviate the officer’s concerns, telling him that he previously worked for Fonterra and was aware of rules surrounding monitoring requirements, wastewater quality, irrigation buffer zones, and not irrigating the same paddock within 14 days.

Langford was also at the farm and told officers he understood “the legalities” of the work being undertaken.

The wastewater was discharged via a truck that drove the length of each paddock. Photo / Supplied
The wastewater was discharged via a truck that drove the length of each paddock. Photo / Supplied 

Later that day, O’Reilly proactively emailed the council the details of the company’s discharge programme, including listing the five farms where it was happening.

It was at that point that the council learned of the full scale of the offending.

On December 10, the regional council issued a formal abatement notice to Waiū, ordering the company to stop the discharge of water to the five properties.

That notice went ignored by the company, which continued to dump 45 truckloads of wastewater over the following five days.

On December 16 at yet another meeting with BOPRC, Waiū informed the council that all discharges had stopped, and the company’s board had made a decision to cease receiving any more product to reduce the volume of processing.

That same day, the council received another complaint from a member of the public who said the water was being dumped within 10 metres of property boundaries and the roadside.

Within the 49 day period where Waiū and Langford were undertaking the discharges, approximately 7.3 million litres of wastewater was drained into the paddocks.

The regional council subsequently laid five charges against both Waiū Dairy and Langford Transport, for breaching section 15 of the Resource Management Act.

Dumping ‘highly careless’ – Judge

Both companies pleaded guilty to the charges early in the court process. The reserved sentencing decision of Whakatāne District Court Judge Melinda Dickey was released late last week.

The biggest question for the court to determine in handing down a sentence was the environmental impact of the discharges, including whether there was any evidence of soil damage or run-off to waterways.

According to the agreed summary of facts, there was no evidence of any discharge to water, nor any evidence suggesting adverse effects on soil quality.

However, as allowed for in the Resource Management Act, the court was also required to consider potential adverse effects.

Prosecutor Adam Hopkinson submitted that with the water so high in E. coli and faecal coliforms, there was potential for the discharges to leach into waterways. As there was no consent for the discharges, Hopkinson also submitted that environmental monitoring and oversight of discharges was missing, posing a possible risk to the public.

Defence lawyer Kathleen Barry-Piceno said that with no evidence of actual harm, no scientific conclusions on actual or potential damage should be made.

Every effort was made to ensure the discharges were made more than 20 metres away from waterways, Barry-Piceno submitted.

In determining a sentence for the offending, Judge Dickey said the actions of Waiū Dairy could be considered “highly careless”.

“While the situation in which the company found itself was unfortunate, the steps it could have, but did not take, when it realised there was a problem demonstrate a high level of carelessness.”

Judge Dickey granted both companies a 25 per cent discount for an early guilty plea, and an additional 5 per cent discount for a previously clean records.

Waiū Dairy was sentenced to a $49,000 fine, while Langford Transport was fined $31,500.

‘We’re sorry for what transpired’ – dairy company

Attempts to contact Waiū Dairy chief executive Samuel Mikaere by phone were unsuccessful.

A number of questions were also sent to Waiū Dairy, including queries surrounding why the company actively ignored the abatement notice.

All questions went unanswered with Mikaere only offering a brief statement with the apology to the community.

Court documents obtained by Open Justice show that throughout the regional council’s investigation, the company accepted that the discharging of the wastewater was unlawful.

As for why Waiū continued dumping wastewater after receiving the abatement notice, O’Reilly told investigators that the company “wound things down as soon as they could”.

Bay of Plenty Regional Council compliance manager Alex Miller said the case stands as a reminder to businesses of what happens when you don’t follow the rules.

“The penalty sends a strong reminder to businesses about the importance of ensuring they are able to meet their obligations to protect the environment by adequately investing in wastewater management and disposal.”

In regard to any ramifications to Waiū’s Provincial Growth Fund loan, the Ministry of Business Innovation and Employment’s Regional Development Unit said that there are processes in place, should a recipient of PGF cash be found flouting the law.

But Waiū Dairy wouldn’t be subject to those in this case, because the offending “did not involve the project which received Government loan funding”.

“The PGF funding was provided in respect of an upgrade of assets at the Waiū Dairy plant while the prosecution of the Waiū Dairy Company was in respect of the Company’s trucking and spreading of wastewater on local farms without the correct resource consents in place.

“We believe the matter has been dealt with appropriately through the courts.”

The marketers are at it again, breathlessly promoting “innovation” as a storm of startups gather, each hoping to cash out their venture capital before their business models crash and burn.

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