Fonterra says a $1 billion housing and adventure park proposed near its Te Rapa site threatens the future of the 51-year-old dairy processing plant.
In a submission opposing the planned Te Awa Lakes development beside the Waikato River at Hamilton's northern gateway, Fonterra said the increased risk of "reverse sensitivity effects" could result in limited new or re-investment at the 24/7 operating site which employs 500 people fulltime.
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The submission, which also reveals Fonterra's shareholder numbers have this year dropped to 9887 from 10,500 previously claimed, was published by the Hamilton City Council ahead of an independent commissioner hearing next week on the Perry Group's application for a private plan zoning change for Te Awa Lakes.
The 85-hectare site, on which 1500 new homes and a waterways recreation park are proposed, is currently zoned industrial.
Fonterra said its Te Rapa factory was a critical asset, with a replacement value of nearly $1b.
The farmer-owned cooperative had invested in the site since 2013, including a $20 million expansion of its cream cheese operation two years ago.
It is one of eight Fonterra dairy processing sites in the Waikato region. One of them is a $360m new factory at Lichfield in south Waikato, which Fonterra was recently reported as saying it was "comfortable" with being unused for half the dairy season for a second year running.
Reverse sensitivity is the vulnerability of established, effects-generating activities to objections from neighbours as a result of new activities locating nearby.
Fonterra noted Perry Group had made a submission on Fonterra Te Rapa's recent application for resource consents to renew discharges from the site. While Perry had supported the application, that support was "subject to the internalisation of effects".
"That is a clear example of reverse sensitivity effects affecting Fonterra's ability to continue its operations at the Te Rapa dairy factory, arising simply due to residential activities being contemplated nearby," said Fonterra's submission.
"All of these factors combine to add significant risk of disruption to Fonterra's operations at the Te Rapa dairy factory, which will be exacerbated during the peak milk period when spare capacity is limited across the North Island network.
"Consequently, in order to avoid or minimise this risk, Fonterra would have to redistribute milk volumes to other sites, primarily being Lichfield ... and Whareroa in the Taranaki region, where such risks do not exist for processing.
"Over time, this could lead to decisions for new and/or reinvestment being directed towards other sites where the policy and planning framework provides greater certainty and reduced risk in terms of sensitive activities establishing."
The potential for significant disruption to Te Rapa operations included a reduction in operation hours and reduced processing capacity and processing diversity due to restrictions.
Fonterra said the decision on how to use sites like Te Rapa depended on the plant, processing capacity and operating restraints, such as location, hours of operation, access and potential for complaints.
"As an example, Fonterra's recent decision to invest in the establishment of a new dryer at its Lichfield site [to respond to the need for additional capacity in the central North Island] was influenced primarily by the lack of sensitive land uses [or zoning enabling such uses] on surrounding land."
Fonterra said a change of zoning could also impact on its future decisions to invest in the development of its farm land west of the dairy factory, currently zoned "deferred industrial". The city council was considering a plan change to give this area an industrial zoning to ensure there was enough industrial land at Te Rapa North to meet growing demand, said the company.
For the council to allow more than 1000 sensitive homes to establish in the Te Rapa North area would not only reduce the availability of industrial land but would lead to constraints on land available for industry. Allowing such a plan change seemed to be directly contrary to the council's intention to provide further industrial land in the area, said Fonterra.
Fonterra's Te Rapa site operates 365 days of the year and includes Contact's co-generation plant.
The development of housing nearby continued to a key issue for the company. To date that housing had largely been in Waikato District Council territory and on the other side of the Waikato River. Fonterra had experienced an increase in complaints about its lawful operations, the submission said.
Open Country Dairy and meat company Affco, which have processing operations at Horotiu, are also objecting to proposed plan change.