Mataura Valley Milk started its first nutritional product trials last week and is on target to begin commercial production at the end of January.

The company processed its first 100-tonne batch on Thursday and plans two further batches of similar size before proceeding to commercial production of infant powders.

General manager Bernard May said the trials will enable the company to commission and test all its blending and manufacturing systems. To date, the plant has been producing conventional milk powders and is operating at its peak processing capacity of 700,000 litres a day.

“We’ve started very well,” May told BusinessDesk.

The company, majority-owned by China Animal Husbandry Group, has spent $240 million developing its plant at McNab, north-east of Gore. Milk collection from its 27 farmer-shareholders began in June and production started early August.

The firm was started to produce high-value nutritional products to maximise the value of the milk produced in the world’s southern-most dairying region.

Suppliers, who receive a premium for their milk, must meet a range of quality standards in order to comply with the plant’s certification to meet quality controls of the China Food and Drug Administration and the US Food and Drug Administration, as well as the requirements of the Ministry of Primary Industries.

May said the firm’s peak supply was at the end of October, about a week later than usual due to good growing conditions. Quality testing from the first 100 days had shown some surprisingly good results, he said, declining to be more specific.

May said the firm is currently considering applications from local farmers to become suppliers next season. The firm will be particularly focused on new suppliers, especially any prepared to provide winter milk, which Mataura Valley is already seeking from existing suppliers.

Only about a sixth of those on the waiting list are likely to be accepted, he said.

Mataura Valley expects it may take three years to optimise its nutritional powder production. Being able to flatten its supply curve – by encouraging late season supply – will be a “big part” of its strategy, he said.

While most nutritional powder suppliers rely on stockpiles to smooth their monthly production, that is quite costly in terms of inventory and storage costs.

Mataura Valley focuses on milk quality over volume, and believes just-in-time delivery ultimately lowers costs to consumers.

“That’s why it’s important we don’t contract too much milk.”

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