State-owned farmer Pāmu is taking a 35 percent stake in a $32 million specialist spray drying facility to develop sheep milk and other specialty powders for the Chinese market.

The investment reflects both renewed government support for the farming SOE, which was lacking under the previous government, and a desire to ensure that New Zealand capital was invested in the facility, which is being built on land at the Waikato Regional Council-based Waikato Innovation Park.

The investment is occurring through newly constituted Melody Dairies, in which Pāmu, formerly known as Landcorp, has a 35 percent stake.

Other Melody Dairies investors are Dairy Nutraceuticals Investments, with a 20 percent stake, which is backed by Chinese investors. Australian-backed Nu-Mega Ingredients (NZ) Limited, an arm of ASX-listed Clover Corp, has a 35 percent interest. A further 10 percent stake is held by New Zealand Innovation Waikato, which in turn is 30 percent-owned by the government’s innovation agency, Callaghan Innovation.

“We are pleased we can help keep a sizeable piece of this important regional infrastructure in New Zealand ownership.” Pāmu chief executive Steve Carden said in a statement.

Pāmu will primarily use the dryer for its push into new products based on sheep milk powders through its 50 percent-owned Spring Sheep venture. But deer milk, organic dairy milk products and other specialty products are also expected to make use of the facility designed to meet smaller scale and niche powder manufacturing demand.

“Capacity for such specialist facilities is severely stretched,” said Carden. “New Zealand has plenty of big dryers for commodity milk. What our country has lacked has been smaller, specialty dryers that can manufacture small scale, novelty milks.  

“We will also be able to access our share of capacity in the dryer for processing other specialist milks, such as our pure organic milk powder,  which we are about to start selling in China.”

The spray drying facility will have a 1.2 metric ton per hour capacity, with construction led by TetraPak to meet strict infant milk formula specifications.

The investment was part of the SOE’s strategy to try to future-proof the company by diversifying its earnings potential and “helping mitigate the commodity cycle that holds the company hostage to some extent,” Carden said. “We expect it to contribute to the growing earnings and financial resilience of Pāmu in the years ahead.”

Shareholding ministers in the previous National Party-led government resisted Carden’s ambitions for Pāmu, preferring it to ‘stick to its knitting’ of traditional farming practice and reflecting a scepticism about large-scale corporate farming.

Carden said the new facility would also assist diversification of land use.

“With environmental restrictions increasing in the Waikato, that’s more important than ever before.”

Pāmu is funding its $11 million commitment to the facility through existing balance sheet capacity. Construction scheduled to start this month and production next November.

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