New milk plant could lead to fixed price contract

By Geoff Adams

Milk processing will return to the former dairy town of Girgarre in northern Victoria after an absence of almost four decades, following a decision by ACM to build a new multi-million-dollar factory.

The news has been welcomed by Girgarre residents who haven’t seen milk production in their town since Nestle shut the former Girgarre Cheese Factory site.

ACM plans to start work in December, subject to planning approvals, with milk processing expected to start in September next year.

ACM chairman Michael Auld said the factory could employ up to 35 people and process about 100 million litres of milk in the first year.

Employment numbers could lift closer to 50 when cheese making production starts in the second year of operation and throughput increases to 200 million litres.

The company may recruit some experienced staff from the Rochester Murray Goulburn factory, which is shutting down soon.

Asked why the company didn’t buy an existing plant like Rochester, Mr Auld said the processing approach was different and the Girgarre plant would be built to provide maximum flexibility in handling different streams of milk.

The company, which has been recruiting organic dairy farmers recently, intends to install two spray dryers and a discrete processing system which will allow it to handle organic and non-organic processing concurrently.

ACM has purchased 10 ha of vacant land adjoining the old cheese factory site.

Mr Auld said the existing services, including gas, electricity and a water treatment system, made the site attractive and Girgarre’s location among dairy farms was also a strategic advantage.

Mr Auld, who grew up in nearby Stanhope, could remember how the old factory had a reputation for milk processing and cheese making.

Nestle shut down milk processing at the old factory in 1979, Heinz used the factory for tomato processing for a number of years and more recently a waste food recycling business, Resource Resolution, has been operating there.

This business will continue with a changed emphasis in the future as the owners have received a $900 000 Victorian Government grant to establish a bio-digester which will generate renewable power.

The new ACM factory may buy the power from the neighbouring plant.

Mr Auld said the company’s focus was on establishing a milk pricing structure that removed some of the volatility for farmers and created a more stable income.

Last year the company finished with $5.30/kg milk solids, and this year was paying $5.76/kg.

“Over time we will be able to offer fixed price contracts over three years for a portion of farmers’ milk,” Mr Auld said.

He said the new factory would help suppliers get access to markets in Asia and domestically with value-added products such as specialty powders, retail butter, cream and cheese.

He said the company believed there was a viable future in the dairy industry if stakeholders get the model right across the supply chain.

ACM director Tom Auld and chairman Michael Auld on the site of the planner new factory in Girgarre, northern Victoria.