First piece in the puzzle for dairy empire

First piece in the puzzle for dairy empire


News
Aa

THE INK is now dry on the first official farm purchase of Camperdown Dairy International, a start-up corporate dairy business.

Aa

KEY POINTS:

  • CDI a corporate dairy player
  • Has finalised the purchase of its first farm, 3000ha in the far west Wimmera
  • Will eventually operate six farms of similar productivity
  • Plans to milk 38,000 cows, potentially Australia’s largest dairy

THE INK is now dry on the first official farm purchase of Camperdown Dairy International (CDI), a start-up corporate dairy business that plans to process 700 million litres of raw milk a year for export as milk powder.

Bill McDonald, managing director of the MCG Group which has an 80 per cent stake in CDI, said the company had agreed to terms for a 3000-hectare property at Neuarpurr on the Victorian–South Australian border earlier in the year, but said settlement had taken place this week.

The Neuarpurr purchase is the first piece in the puzzle of an ambitious project that will eventually see CDI purchase five more properties with equivalent productivity and milk 38,000 cows at any one time in what is believed will be Australia’s largest dairy farm aggregation once it is at full production.

Mr McDonald said the company was in negotiations for other properties, but could not reveal their location due to commercial in confidence constraints.

He revealed they would be spread over a wide geographic area right up into the Riverina.

The cows will be sourced from across Australia and down the track American genetics will be used to create a self-replacing herd.

Around a sixth of the cows will be going to the Wimmera property.

Mr McDonald said the key tenet to the business was being as vertically integrated as possible.

“We ultimately want to have to outsource diesel, fertiliser and wages and that’s it.”

However, he said it was likely the business would need to source milk elsewhere and was offering large producers long term supply contracts.

The milk will be produced at the farms and partially processed before being taken to Camperdown for processing.

Investment in the processing capability at Neuarpurr alone is expected to cost $40 million.

At Camperdown, Mr McDonald said the company planned to utilise two milk driers to refine the product, before packing it and sending it to Melbourne for export.

China is the major destination, accounting for 60pc of production, but Mr McDonald said exports would also be heading to the Middle East and America.

“You don’t want to focus on just the one market.”

He said CDI already had long term arrangements in place with international buyers, with some 20 year deals already in place.

“It makes it easier for us to know our cost structures, it helps us when we go to make purchases."

In terms of animal husbandry, Mr McDonald said some of the cows would be shedded, a trend not common in Australia, but gaining increasing traction in large scale dairies.

“It will be based on the climatic conditions to an extent how the cows are managed.”

The Neuarpurr property has been planted with hay and feed grain crops already.

Mr McDonald said he expected there to be 100 jobs created at Neuarpurr during the construction phase, with 80 ongoing jobs.

Despite the MCG Group’s mining background, he said workers would be sourced locally and would not operate on a fly-in, fly-out basis .

“We want to keep employment in the local areas where we will be based.”

He said he did not believe there would be trouble sourcing cow numbers for the business, in spite of the massive numbers.

“Australia exports 70,000 dairy heifers a year to China for $1500 a head, I think if we offered $1600 we could probably get hold of some of them.”

The CDI business is made up of an 80pc stake for the MCG Group, 10pc for Melbourne-based Eat Investments and 10pc is owned by a private investor.

Brave new world

CDI’S investment in the new dairy at Neuarpurr, in the far west Wimmera, represents a dramatic shift in terms of industry focus.

Interest in new dairying projects in Victoria in recent years has been heavily skewed towards rainfall-based systems in the high rainfall zones of the Western District and Gippsland.

However, Bill McDonald, managing director of CDI’s parent company the MCG Group, said the business saw the secure irrigation water from underground aquifers as a key factor in investing at Neuarpurr.

“We’re expanding into new areas for dairying and we see irrigation as a key way of drought-proofing these farms.”

The far west Wimmera, centred on Neuarpurr and Minimay is currently used for mixed farming, supplemented by income from centre pivot irrigation, primarily producing small seeds such as lucerne and clover and fodder production.

Mr McDonald said he did not see basing the farms outside traditional dairying areas as an additional cost burden.

In fact, he said being closer to grain and fodder hubs would help cut costs.

“Bulk commodities are expensive to move, milk is cheap.

“At the west Wimmera location, we’re working on about 2.5 cents a litre to get the milk to our processing plant in Camperdown.

“Anything within a 5c/l radius of the plant we see as being economic.

“There’s also some big savings in terms of freighting feed for the cows sourcing the grain and fodder locally.”

He said there would be a processing plant onsite at Neuarpurr which would allow the business to partially dry the milk before freighting it.

“We can get rid of some of the water from the milk and cut freight costs and also recycle that water for use on the farm.”

The price of land is also a cost-saving.

“Rather than pay $6000 an acre in the Western District, we can pay $2000-2500 in other areas.

“Along with that, the animals will not struggle with condition as much as they do in a cold and wet Western District or Gippsland winter.”

Locals pleased

MINIMAY resident Geoff Carracher said the proposed CDI dairy at nearby Neuarpurr would be beneficial to the far west Wimmera area.

“It’s a big project and you have to think it will have flow on effects for the district.

“They will be big users of hay and grain, and obviously local farmers will have a freight advantage to supply them with their needs which is good.

“There will also be an economic boost having the workers in the area, and even in things like constructing facilities on the farm, both in terms of accommodation and infrastructure.”

Mr Carracher, a semi-retired farmer, said the land acquired by CDI was some of the earliest ground in the district opened up to irrigation.

“I am not sure on the exact dates, but I would say it would have been in the late 1970s.”

He said he was not worried the dairy would have an adverse impact on groundwater levels.

“We’ve got a robust water regulation system here and everyone is allocated water fairly, so that won’t be an issue.

“The old Neuarpurr groundwater management scheme was one of the first of its kind in the state, now we’re under the auspices of the Wimmera Mallee Catchment Management Authority.”

He said road maintenance would also be critical.

“The major Natimuk-Frances Road is now a VicRoads administered road, which is good, as it would be tough for the local West Wimmera Council to manage a road with so much added traffic, with all the tankers going to Camperdown each day.”

The story First piece in the puzzle for dairy empire first appeared on Farm Online.

Aa

From the front page

Sponsored by