DAIRY giant Fonterra has set up a manufacturing plant in Indonesia to blend and pack milk powder at a cost of $36 million.
It is the dairy giant's first manufacturing plant in Indonesia, located in the industrial city of Cikarang, and will blend and package the Anmum, Anlene and Anchor Boneeto brands.
Anmum is infant formula, Anlene a high nutrition milk and Anchor Boneeto a high calcium milk.
ASB economist Nathan Penny said that tapping into emerging market demand was the way forward for New Zealand and Fonterra.
"The market that grew earliest and fastest was China so it's pleasing to see Fonterra is making additional investment into a market with good potential," Penny said.
New Zealand exported $423.8m worth of dairy products in the year to June to Indonesia, its 12th largest trading partner.
Chairman John Wilson said the plant was Fonterra's largest investment in ASEAN in the last decade.
"Fonterra has been supplying high quality dairy nutrition to Indonesia for more than 30 years and today it is one of our most important global markets. The opening of our new plant is an exciting step forward in our relationship with the country and local dairy industry," he said.
Fonterra managing director Asia, Middle East, and Africa Johan Priem, said the demand for dairy products was expected to increase by 5 per cent every year to 2020.
"Our new plant has the capacity to pack around 16,000 tonnes of dairy ingredients a year – that's a pack of Anlene, Anmum and Anchor Boneeto every second, or 87,000 packs every day, which will go a long way in helping Fonterra meet this growing demand for dairy," Priem said.
Fonterra had worked with local partners on construction and, when running at full capacity, the new site would employ 160 staff.
"The site also utilises Cikarang's dry port, allowing us to ensure all of our operations are located in one area. This will help us drive logistical efficiencies," he said.