Environment Canterbury and Waimate District Council have approved Oceania Dairy’s resource consent application for a dairy processing plant at Glenavy.
The plant plans to process approximately 220 million litres of milk and produce around 32,000 tonnes of milk powder a year. It is expected to be operational for the start of the 2011/2012 season.
It’s a $95 million development and the company is now concentrating on its $74.75-million capital raising.
Farmers have the option of being shareholders and suppliers or just suppliers. The company is also seeking investment from non-farmers.
Farmers who supply Fonterra have to own shares in the company. With Oceania farmers could supply the company without having to make a capital investment. That could be attractive to people starting in the industry or those already in dairying who want to lower their debt levels.
However, this is a new company and farmers will have to weigh up whether or not they can get a return from a company without a track record which would be close to or better than that from Fonterra.
Only suppliers can own Fonterra shares. Oceania offers an opportunity to invest in dairying for non-farmers but no investment is risk free and only time will tell if this company can succeed in export markets.
Most forecasters are expecting stability or a slight reduction in milk prices in the short to medium term. But most also recognise that the world is short of food and any company from New Zealand selling milk does so with the assistance of our reputation for high standards of food safety.