Fonterra plans to close Kaikoura cheese factory

Fonterra says moving production to other sites would deliver "significant savings". Photo / David Kerr

Fonterra is planning to close its cheese plant in the South Island town of Kaikoura.

The site is open for three to five months a year, and employs 22 full-time staff, Fonterra said in a statement. It's understood the co-operative is looking at offering redeployment to affected staff.

The Kaikoura plant processes 245,000 litres of milk a day, turning it into 28 tonnes of cheese that is exported to international markets in Japan, the USA, Australia, Europe and Brazil. Fonterra says moving production to other sites would deliver "significant savings".

Mark Leslie, Fonterra's director of New Zealand manufacturing, said a final decision is expected by the middle of the month and the company was discussing all "options and opportunities" available to the staff around their future employment should the closure go ahead.

"This is a difficult process for our people and supporting them is our priority as we work through the details," Leslie said "The proposal to close the Kaikoura site has not been made lightly and is one intended to help generate cost savings for the benefit of all Fonterra farmer shareholders."

Last year Fonterra made 835 people redundant as it underwent a major restructuring in the face of falling dairy prices around the world. In November, it said 'business transformation' initiatives were expected to increase recurring cash benefits to $340 million a year and contribute to both 2016 earnings and the farmgate milk price.

The proposal to close the Kaikoura site has not been made lightly and is one intended to help generate cost savings for the benefit of all Fonterra farmer shareholders.

Units in the Fonterra Shareholder's Fund, which gives investors access to the co-operative's earnings stream, were up 0.2 percent at $5.95. They've fallen by 0.8 percent since the start of the year, outperforming the broader S&P/NZX50 Index.