Markets

Freedom investment flagged

By Geoff Adams

THE SHEPPARTON UHT dairy factory of Freedom Foods will become the cornerstore of the company’s dairy push with $70 million earmarked for investment at the site during the next 12 months.

The company is planning to boost its milk throughput on the site from 300 million litres to 500 million.

Freedom Foods announced its net profit of $19 million on sales of $353 million for the 2017–18 financial year last month.

The company already has 40 dairy farm suppliers, and managing director Rory Macleod said they would be encouraging existing suppliers to lift their production to meet the increased capacity, although there may be opportunities for new suppliers in the future.

Freedom has an agreement with dairy supply company ACM to supply 100 million litres annually, but Freedom is developing its own supplier base, providing what Mr Macleod said was a price, “not the highest, but not the lowest”.

“We are very focused on our existing base and encouraging them to grow their production, before we seek out new suppliers.”

The Shepparton factory processes UHT milk for overseas markets and Freedom Foods has now become the largest supplier of contract packed milk brands to China and private label milk in Australia.

Mr Macleod has told investors that volume through the Shepparton site has increased and additional volumes will start during the first half of the 2019 financial year, reflecting demand in Australia, South-East Asia and China.

“The Shepparton UHT operations continue to be well placed to benefit from the significant changes occurring in the production structure of the Australian dairy market and the increasing demand from export markets in South-East Asia, China and the Middle East,” Mr Macleod said.

The company is also planning to expand nutritional manufacturing at its Shepparton site.

Freedom Foods owns an interest in Moxey Farms, in NSW, but Mr Macleod said the company was not interested in buying farms in Victoria for direct supply to Shepparton.

During the past financial year the group finalised installation at Shepparton of additional one-litre format capacity and also upgraded processing capability and downstream packaging.

The increase in processing capacity would align and support growth in UHT filling capability at Shepparton to meet demand in domestic and export markets including South-East Asia, China and the Middle East, Mr Macleod said.

“The expanded processing capability will provide flexibility to further increase UHT filling capacity as market demand increases.”