PROGRESS is occurring faster than expected for the state’s newest milk processor.
Midfield Group’s new plant at Penola has been in operation for about a month and is already running at 98 per cent of its first year capacity, according to dairy operations director Daniel Aarons.
Mr Aarons said the company was working ahead of its commissioning schedule and had shipped 4.5 tonnes of finished product to a range of markets already.
“We managed to get to 90pc capacity in a shorter time than planned,” he said.
“The plant is performing so well we are always interested to increase year one throughput.”
Mr Aaron said they had already experienced a shift in markets with unexpected interest from the domestic trade.
“We’d initially designed the business expecting export to be 100pc of the operation,” he said. “We’ve been overwhelmed by how much interest we’ve received in the domestic market.”
In recent days the company had executed contracts in skim and whole milk powder, fresh cream and anhydrous milk fat.
“Demand volume is three-fold what we have the capacity to produce (at this stage), which is a good place to be,” he said.
Mr Aaron said with the plant running at a higher capacity than expected in its first year, the business had the opportunity to capitalise on these markets.
The major export focus is South East Asia, the United Arab Emirates and northern Africa.
“Everyone expects milk powder to be predominantly for China but most of our product is going to all these other locations,” Mr Aaron said.
Midfield has been actively recruiting producers from the local region for its milk, with Mr Aaron saying they had found a “great family” of suppliers.
He said the aim was to have 40pc of the volume from the South East with 60pc expected from Vic, within close proximity to the border.
He said the company had already procured more milk than expected for year one – in September last year they declared they would initially be seeking about 200 million litres.
There were also plans for additional investment such as value-adding, diversifying and increasing the milk pool to aid economies of scale, according to Mr Aaron.
“In the not-too-distant future, it’s not unreasonable to say we could be handling 500mL of milk a year,” he said.
He said the lead-up to Christmas would be spent consolidating their practice.
“Our intent is not to do anything in a mediocre way,” he said. “It’s important to us to ensure our investment, the dry evaporator, is functioning the best it can, in the most efficient and economic manner.”
Industry endorses growing demand
SA Dairyfarmers’ Association chief executive Andrew Curtis has welcomed the news of a new processor operating in the state, as Midfield Dairy builds capacity at its Penola plant.
“It’s great that producers have option to supply them or processors across the border,” he said.
“We continue to encourage all processors to recognise dairying as a long-term business and if they’re able to provide surety and long-term signals, farmers will be able to produce more milk for them.”
Mr Curtis said increased competition was welcome, not just in potentially leading to better prices but also to less exposure to market concerns.
In June this year Midfield offered an opening price of $5.50 a kilogram milk solids plus a 25 cents/kg sign-on bonus, while Murray Goulburn offered $4.70/kgMS and Fonterra $5.30kgMS.