Burra Foods will pack and export infant formula direct to China following a $24.5 million investment in its Korumburra factory.
The State Government-funded expansion will allow the Gippsland company to export formula direct to the Chinese market, removing the need to can and label offshore.
CEO Grant Crothers said this would increase profits, maintain its competitiveness in a competitive sector and potentially increase returns to suppliers.
The expansion comprises a new building to house the upgraded canning and repacking lines; plant and equipment for powder handling and blending and utility upgrades and external infrastructure.
This will enable the company to shift production of milk powder in bulk (25 kg bags) to consumer packs (400 gram and 800 gram cans) suitable for specific export markets such as China.
It will also enable increased production of other powdered milk products including adult, student and pregnancy powders, as well as high protein skim and full cream milk, which will maximise the revenue and economy of scale from the existing manufacturing equipment.
The project will increase profits from exports as it becomes further incorporated into a global supply chain, leading to the potential for better milk pricing for dairy farmers and suppliers.
Mr Crothers said the expansion was a further sign of Burra’s confidence in the industry and its ability to succeed in this competitive category.
“Led by changing regulations in the Chinese market, the Nutritional Milk Powder category has been volatile in recent times but with persistence and lots of hard work, we have successfully carved out a sustainable niche and built confidence around the future,” Mr Crothers said.
“The $24.5 million initiative to build blending and canning capability on site is further commitment to South Gippsland and our most significant expansion initiative since 2011.
“It heralds the introduction of new skills and will enable Burra to deliver ‘consumer ready’ canned products,” he said.
Mr Crothers said the project will generate up to an additional 39 jobs on site. The new jobs at Burra Foods would suit employees made redundant from Murray Goulburn’s Leongatha plant last year.
Mr Crothers said site works could begin early this year once local government planning approval is completed. It is expected the project will be completed late next year and commissioned in 2020.