Big dairy farms set to jump ship from Fonterra

A grouping of Fonterra's bigger corporate milk suppliers plans to announce later today that they are setting up their own processing operation.

Synlait Investments Ltd says it represents one of New Zealand's largest dairy farming operations, with total assets of $80 million including 2800 hectares of land and an 8500-strong herd.

It will divert milk from the 3.75 million kg of milksolids it was expected to supply to Fonterra Co-operative Group Ltd in the next season, which begins on June 1, industry sources said today.

Synlait Investments' directors, including agribusiness developer John Penno, farmer Ben Dingle, Juliet Maclean and former National Party leader Ruth Richardson, will hold a press conference in Wellington later today to outline the company's plans.

Dr Penno was last year awarded the Sir Arthur Ward award by the Society of Animal Production for his successful application of scientific research.

The society said Dr Penno was at his best explaining the principles of profitable dairying and the huge opportunities that lay before the New Zealand dairy industry, and the award was partly for his expected future impact on the industry.

"As a developer of large-scale dairy farms, he is currently leading the industry by example," the society said. He was employing innovative development, layouts, organisational structures, human resource management, and ambitious targets on the farms.

Dr Penno worked in grass-roots and leadership roles within technology transfer, research and farming after graduating from Lincoln University with an agricultural science degree in 1990.

He was a dairy industry consulting officer in Taranaki, and completed a doctorate in animal science at Massey University while researching dairy farm systems at the industry's science centre at Ruakura, near Hamilton. He bought his own farm in 1999, and has been involved in putting together large-scale farms in the South Island since 2000.

On completing his doctorate, Dr Penno quit as general manager of extension services for the industry's farm research company, Dexcel, and in November 2002 began working fulltime on Synlait Ltd, established in May 2000, and Synlait Investments, which was registered in June 2002.

Other companies set up since then have included Synlait Developments (February 2004), Synlait Milk (March 2005) and Synlait Farms One (April 2005).

Fonterra chairman Henry van der Heyden has previously said that Fonterra needs defensive mechanisms to mitigate competitive risk from home-grown rival processors.

After former MP Wyatt Creech last year launched his new $25 million Open Country cheese factory, Mr van der Heyden said: "They are knocking on the doors of our farmers that have the flattest milk curves... and the farmers closest to the factories."

Recently, a Taranaki dairy farmer, Kelvin Gray, started processing milk from one of his two farms at Okato, 26km southwest of New Plymouth and selling it under the brand Taranaki Fresh Milk.

- NZPA