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Yili's Oceania Dairy sets minimum 15-16 milk payout at $4.50

Yili's Oceania Dairy sets minimum 2015-16 milk payout at $4.50/kgMS, a premium to Fonterra forecast

By Jonathan Underhill

Sept. 21 (BusinessDesk) - Oceania Dairy, the South Canterbury-based dairy company controlled by China's Inner Mongolia Yili Industrial Group, has set a guaranteed minimum milk payout for its suppliers this season at $4.50 per kilogram of milk solids, or 65 cents more than Fonterra Cooperative Group plans to pay.

“With Fonterra reducing its forecast payout for the season to $3.85, we wanted to send an important signal of support and partnership to our supply farmers,” said Roger Usmar, Oceania's general manager. "By providing a premium minimum guarantee, we can offer our supply farmers some certainty to their cash flow and operational planning for the 2015-16 season."

Yili acquired the fledgling Oceania in 2012, gaining access to 38 hectares of land at Glenavy with existing resource consents to build a dairy processing factory after the previous owners failed to raise enough funds to complete the project.

Yili officially opened its $236 million plant in November last year and said it would invest a further $400 million over five years at the site. It contracted to buy milk from 48 local supply farmers for the 2014-2015 season and has also said it would take up milk under Fonterra's regulated supply. Throughput last season was targeted at 220 million litres, producing 32,000 tonnes of milk powder, mainly for use in infant formula.

The five-year plan includes a whole milk powder dryer, an infant formula canning line and facilities to make UHT milk and lactoferrin.

Yili had been named as a potential suitor to New Zealand Dairies' South Canterbury milk processing plant in 2010, when Russian owner Nutritek Group started shopping around for a buyer.

Fonterra ultimately bought that plant out of receivership.


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