CONTENTS

Processing Capacity

Outcome:  To Attract additional Processing Capacity to the state

Project Activities and Achievements:

• Milk Production and Distribution Maps
  PIRSA Spatial Unit Appendix 30
  Number of Dairy Cows by Hundred
  Milk Production & Supply to Processors by Hundred
  Milk Production by Hundred
  
  Production data has been obtained and processed into production and distribution maps for the state for the 2003 /2004 season.  Information on milk intake, processing capacity, type of manufactured products produced, long term production plans and   potential for growth for each of the major processors has been done to get a better understanding of the current processing position of the state.  This information has been used to develop the revised targets for the state dairy plan.  This information has also been made available as an information pack for new potential processing investors that enquire about South Australia.
  
  
• Consultation with Processors re: State Dairy Plan Update
  Steve Spencer and Sally Schultz
     
  Consultation was undertaken by Steve Spencer and Sally Schultz, with senior management of a number of dairy companies which are relevant to the SA dairy industry.  These companies, National Foods, Dairy Farmers, Murray Goulburn and  Warrnambool Cheese & Butter have provided high-level input in the development of the original SA Dairy Plan for 2010 when it was completed in 2001. 

The impact of drought, attrition in dairy farm supply in SA and other regions and some major progress in corporate restructuring within the industry has changed the outlook of major dairy companies as to the role that the SA milk production regions will play in their business futures.  The attached document outlines these changes and gives us an insight into the potential for increased processing capacity in South Australia over the next 8 years.

• Relationship Building with Potential New Processors   
  Sally Schultz, Jurij Polischko and Rob Demarco  Appendix 31 

Jurij and Rob are from Department of Trade and Economic Development and Commercial Projects in PIRSA in South Australia.  As part of a relationship building exercise with the major dairy companies in Australia, Jurij, Rob and myself spent a day meeting with high-level management in Melbourne.  We discussed the plan for milk growth and development of the dairy industry in South Australia and sought feedback on the long-term plans and goals of the companies’.  Interestingly Bonlac was the company that has the most interest, with a plan to significantly increase their milk throughput in the next 3 to 5 years.  Their area of interest for milk supply was the South East region, however they are interested in investing in new technology for concentrating milk for transport, rather than investing in further stainless steel plant and equipment.

• Discussion with Potential Investors (confidential)
  Yosica, Australian Dairy Product, and Lacto Ltd
  
  There has been some enquiries from processing companies interested in investing in both the South East region and the Murraylands.  I have been in discussion with Yosica, Australian Dairy Product, and Lacto Ltd an Indian Company.  I have provided information and statistics on the current milk flows and processing capacity in SA and the planning requirements to proceed further with the assistance of the Limestone Coast Regional Development Board and the Department of Trade and Economic Development.  Interested companies include: 

Nordmilch
Nordmilch is a German food manufacturing milk processing and dairy manufacturing company. The company is intending to establish a new dairy production facility in Asia-Pacific to supply South-East and East Asian markets.  It is investigating South Australia as an option.
The focus is on milk processing with a product portfolio in line with the demand of target markets across Asia.  The expected product range includes semi hard cheese, yoghurt, whey powder and butter.
The company is prepared to consider partnering with local dairy companies (JV) to expand existing facilities for joint manufacturing and marketing of products or the construction of new production facility.  It is willing to invest around A$60m in a new production facility.

Meningie Milk Products
Meningie Milk Products is a South Australian based company that is in the process of purchasing several Dairies with a view to also constructing a Milk Powder Factory for export purposes  to Asian milk powder/milk product clients.  The powder factory would be based in the Murraylands region.

Numico
Numico is a South Australia high growth, high margin specialist nutrition company.  They have developed a whey protein concentrate process and hyper immune milk product at pilot scale that is proving to be clinically effective.  They are currently in the process of working out how to produce enough product to meet their proposed market.  Present production is coming from the Fluerieu Peninsula from 3000 cows.  Their forward projection is that over 100,000 cows will need to be hyper immunized  by 2008 to supply the market.

• Liaising with New Investors in the Region
  The ADP project and the Limestone Coast Regional Development Board have been involved in helping guide companies through the investment process in the South Australian Dairy Industry.  Below are some examples of investments that have had input from the ADP project:

Warrnambool Cheese and Butter
Warrnambool Cheese and Butter have purchased the old Millel factory in the Mt Gambier region.  The company also purchased well-known local cheese brand ‘Cheese Masters’.  Production of cheese master cheese will commence at the Millel factory later in the year.  The site will also become a cellar door face for the company as they move into the boutique cheese market

Kraft Foods
Kraft Foods are upgrading their present soft cheese production facilities in Suttontown, Mt Gambier to double its production in the next twelve months.  The milk for this increase in production will be sought from South Australia and Western Victoria.  The factory will become the largest cream cheese producer in Australia.

Lucindale Cheese Company
Lucindale Cheese Company is a small boutique Cheese Producer based in the South East of South Australia.  The company is sourcing its milk locally to process into hard cheddars, soft moulds and fresh curd.  The dairy products including fresh milk are all marketed locally.

• Publicity and Promotion
  Royal Adelaide Show    Appendix 32 (Exhibition dairy, dairy pavillion, heritage)
  
  As part of publicity and promotion of the South Australian Dairy industry we developed a poster display at the Royal Adelaide show.  Over 150,000 visitors enjoy the festivities of the show with the dairy pavilion being a favourite location.  The posters were located in prime real estate in the dairy pavilion, the Exhibition dairy and with the heritage display.
  
  
• Labour and Skills Requirement Document
  Amy Williams, Rural Solutions SA
   
  The labour and skills requirement and the training needs for the processing sector have been documented as part of the training needs analysis document.  The training needs show that as the industry moves toward the state dairy plan targets, that there will be an additional 600 employees in the processing sectors and that 5 levels of training are required to develop skills and attract people to this area of employment.

An important achievement and development of this work has been the proposal to coordinate dairy education and training by a joint committee comprising industry, TAFE, the ADP project, PIRSA and DFEEST. It is likely that funds and resources will be provided by the National Centre Dairy Education Australia (NCDEA) for a part-time coordinator to drive this program forward.

• SA Cheesefest   Appendix 33
  Cheese SA in conjunction with Food SA, the ADP Project and Fleurieu Food present CheeseFest, the first Australasian Alfresco Cheese Festival on 14 & 15 October 2006.  This inaugural event will be held during Fiesta! In the Fleurieu Peninsula region, set amongst the historic vineyards and olive groves in picturesque McLaren Vale.   The cheese judging competition will see up to 50 Australasian specialty cheesemakers compete for the Festival Trophy.  There will also be a Masters of Wine Trophy and Consumers Trophy, judged respectively by a wine panel and a public judging panel.

Financial Analysis