New Camperdown investors target China

A new export dairy producer based at Camperdown in south-west Victoria aims to milk 10,000 cows to serve a booming international market.

 

Camperdown Dairy International has been formed after agricultural investment management company EAT Group combined with resource development company MCG Group to buy an infant formula blending and filling business, the Camperdown Cheese and Butter Factory and local farms.

 

The arrangement will be the first farm-to-distribution supply chain operation in Australia.

 

It aims to process 100 million litres of milk in the first year of operations with the target to supply both bulk whole milk powder and infant formula powder to Asian markets, primarily China.

 

The plans include a new $120 million spray drier at Camperdown.

 

Camperdown Dairy International Chief Executive Phil McFarlane said the business plan was based on supplying a premium product in high demand by consumers in international markets and selecting the right assets to meet that demand.

 

“Our business is very much about bringing the whole supply chain together to bring value, ensure efficiencies, keep control of costs by investing in both the farm gate and supply chain assets,” he said.

 

“We didn’t think it was sustainable to leave the farmer out of our business plan; that is the key difference in our model.”

 

Mr McFarlane said traceability was demanded by Asian markets, particularly in China.

 

“Manufacturers need to demonstrate where their produce comes from. Our business represents traceability from the production plant right back to the farmgate.

 

“That’s one of the advantages of owning the farms. That is a real credibility tick along with ensuring the quality and the volume that those markets require.”

 

Mr McFarlane said the company had acquired some farms in the area and aimed to buy more. He would not reveal specific details of the purchases.

 

“We have acquired some farms and are accumulating more. We have a target of 100 million litres of milk under our management portfolio. We will work to build up our own farms as well as contracting milk from existing farmers who may want to be part of our supply chain,” he said.

 

“There’s no point us stealing milk that Murray Goulburn or Saputo is getting. We need to develop our own supply and we need to develop bigger farm enterprise systems. We have to select farms that we can expand via capital investment that can double or triple production.

 

It comes down to managing herds, managing replacements, breeding and inputs. We also want to integrate grazing and grain producing enterprises so the farm system becomes self-supporting.”

 

“We have 40,000 litres and aim to reach 100 million litres by the end of next year. We want to milk 10,000 cows so we need to build to that level. It won’t be overnight but it will come from our internal breeding strategy, managing the genetics and the health of the cows.”

 

The first phase of the project will involve farms in Western Victoria and South East South Australia but properties in northern Victoria and New South Wales may be future targets.

 

“It’s not about trucking milk in from other parts of the state. It’s basically getting control of the milk source.”

 

He added that farm acquisitions took time to negotiate but local farmers had been very receptive to the idea.

 

“We have built our business from the customer end first. We have started at the front door to come to the back door. We hope that by opening up new international markets we won’t be talking to farmers about what’s the price of milk. Rather, we will be talking about quality and volume because we’ve got our foot on costs and efficiencies. The bottom line will tell its own story. We need them to stay and we need them to grow.

 

It is hoped the new $120 million spray dryer at Camperdown will come on line by the end of next year. “That’s not stopping us securing farm gate milk supply now and trading it as we build to our targets,” Mr McFarlane said.

 

He said the company could work with the majors but added that “we’re not trying to be Murray Goulburn or Saputo”.

 

“Our model is very different. You can’t expand unless you invest in the farm and tie that to the supply chain asset and open up new international markets.”

 

Aussie Farmers Direct’s Camperdown Dairy will also continue to operate from the site.

 

WestVic Dairy Chair Lisa Dwyer welcomed the announcement as a show of confidence in the local industry.

 

“We are very pleased to see a project that demonstrates a sense of confidence in the future of dairy in south-west Victoria,” she said.

 

“Our focus at WestVic dairy is assisting dairyfarmers to have profitable enterprises now and into the future, and anything that demonstrates confidence in the future of dairying in this region has to be positive.”

 

Ms Dwyer said south-west Victoria produces 23% of Australia’s milk.

 

“We are critical to Australia’s dairy industry. We have had some difficult times so it is nice to see more positivity in the outlook and a lot of talk about potential investment.

 

“However, most farmers are sitting back rather cautiously until they see more sustainable milk prices and some stability, rather than one good year,” she said.