Australia: Potato, dairy and meat industries unite

In a complex story with many twists, the dairy venture will be set up at a site where the region’s potatoes have been processed and stored for more than 20 years.

To add to the confusion, the company that now owns the site, Midfield Group, is renowned for meat processing, but is diversifying into dairy for the first time.

It is believed the transformation of the former potato factory will mean 80 construction jobs and, when processing begins in 2016, it will employ 50 full-time staff.

Midfield Group will be looking for 160 million litres of milk from dairy farms every year and, to begin with, will focus solely on powdered milk for export.

Managing director Colin McKenna said there was great potential for growth in the dairy sector.

"We see that there is a tremendous opportunity to grow our company, particularly in the dairy industry of Australia," he said.

"Obviously for the farmers, the prices are not as good as what the farmers would like them to be.

"But I believe, with further investment by various companies such as ourselves, it will grow to the extent that they get the benefit."

South Australian Premier Jay Weatherill said the plant would help fill the gap for dairy farmers after the collapse of UDP.

"This facility, we believe, will have a strong future in the south-east, will grow jobs in the south-east, and there is an ambitious future for the milk industry."

Potato farmers still have home for spuds

When McCain Foods announced it was closing its Penola processing site down in 2013, it sent the region’s potato growers into a spin.

Their produce then had to be sent to Victoria for processing and access to vital cold storage facilities was under threat.

Farmers came together to purchase the site from McCain Foods and were confident their future was secured. But just days before ownership was signed over, Midfield Group was successful in outbidding the farmers.

However, potato farmers will still have access to storage facilities for at least five years, under a leasing contract.

"The normal potatoes we would have stored there if the factory was still running is still occurring," one of the region’s biggest growers, Terry Buckley, said.

"We were reasonably concerned about our future, in that there was no saying who was going to get the site and they may not have had any interest in actually re-leasing the stores."

"It’s one of the better outcomes that could have happened. Hopefully there’s an ongoing and long-term future there."

Dairy farmers ’cautiously optimistic’ about new processor

South-east SA dairy farmers are "cautiously optimistic" about the prospect of a new processor, stressing they would need to be offered a premium for their milk to shift allegiance from other processors.

Dairy SA chair James Mann said there were opportunities for the region’s dairy sector to grow, but prospective dairy farmers lacked confidence to invest in the sector.

"There’s enough water around, there’s enough land around, that if dairy was providing consistently the higher return there would be the opportunity for that country to go to dairy," he said.

Of those already in the game, Mr Mann said there would be a select few looking to shift processors, but most farmers would need a lucrative offer to "shift camp".

"If you look back with history, when people are offering perhaps more than 5c or 6c above existing supply, they tend to get as much milk as they want," he said.

Midfield Group’s Colin McKenna said he was not looking for existing farmers, instead focusing on "growing the market" and the sector as a whole.

"We have a vision to also invest in dairy farms as the future draws on, as we have in the western district [of Victoria]," he said.

"In the Warrnambool area, this year we’ll produce something like 40 million litres of milk ourselves.

"At this stage, we’ll need 160 million litres of milk a year. We produce 40 million of our own, so that’s not a big thing."