As eastern Australia’s farm milk output shrinks, the nation’s biggest dairy farming outfit, Australian Fresh Milk Holdings, has finalised its takeover of Gerry Harvey’s former northern Victorian property to help diversify its supply base.
The Coomboona Dairy near Shepparton milks about 2400 cows, but was previously planned to be expanded to about 5000 when the retailing and Thoroughbred entrepreneur bought into the business in 2015.
A year ago Coomboona, which operates a mix of open grazing and free stall herd housing, went into receivership.
Management eventually accepted an offer from AFMH in November.
The Harvey Norman business took an impairment loss of almost $29 million on its shareholding in the farm last financial year.
AFMH’s operations, based on the giant Moxey Farms dairy at Gooloogong in central NSW’s Lachlan Valley and other nearby farms, already milks about 7000 cows, producing more than 150 million litres annually.
AFMH plans to invest in infrastructure and increase cow numbers at Coomboona over time to meet rising demand for milk at the nearby Freedom Foods milk processing plant at Shepparton.
That plant has just begun producing liquid and powder nutritional ingredients based on micellar casein protein and will be commercialising whey and lactoferrin protein production during the next four months for the infant, sport, medical and weight management markets.
Its ultra high temperature (UHT) milk processing capacity is also doubling to a processing capacity of 500m litres a year, much of which will be on line by June.
AFMH is jointly owned by the Perich and Moxey families, Chinese food giant, New Hope, and Freedom Foods.
Freedom committed $4.6m to the Coomboona acquisition.
“The Coomboona Dairy operation will expand AFMH’s production platform in a renowned dairy farming region,” Freedom managing director Rory Macleod said.
“It will provide the opportunity to leverage its integrated approach to deliver sustainable production of high-quality milk, supporting a range of value-added product opportunities.”
Thirsty Shepparton plant The increased UHT capacity at Shepparton would ensure Freedom kept pace with the strong demand for long life dairy products from the site anticipated in the next few years.
Freedom also sources milk from independent individual suppliers in southern NSW and northern Victoria, including the Kiewa Valley’s Mountain Milk Co-operative.
AFMH’s southern expansion push is well timed given milk supplies in northern Victoria have been under stress as drought conditions bite harder.
Related reading Coomboona dairies hit the market Freedom Foods buys Coomboona Milk production plummets
Milk volumes fell 13 per cent in the year to November 30 and 20pc for the month, compared with the same time in 2017.
The Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) forecasts a 4.1pc production drop for Australia in 2018-19 to 8.9 billion litres - the lowest level since 1995-96.
Last week New Zealand giant, Fonterra reported its Australian milk receivals for the six months to December 31 slumped 14pc on the same period in 2017 to 72 million kilograms (milk solids), while December production alone was down almost 20pc.
“High input costs and poor seasonal conditions continue, resulting in increased cow cull rates decreasing the season’s milk production,” the company reported.
A spokesman said declining milk production across most of Australia meant all processors were competing more aggressively for the available milk.
Fonterra has subsequently adjusted its processing operations to accommodate reduced milk inflows, including starting its Cobden powder drying plant maintenance shutdown in western Victoria about eight weeks early and continuing until June.