Maori groups work with Japanese firm on $32m Kawerau milk processing plant

UPDATED: A group of Maori organisations has partnered with Japanese food company Imanaka to develop a milk processing plant to make high-value niche products in Kawerau.

Kawerau Dairy is a collaboration between 11 Maori Bay of Plenty entities, which own two thirds of the venture, and Imanaka's Cedenco Dairy unit, which owns the remaining third. They expect the first stage of the $32 million project to begin operations early next year.

The dairy venture is following the model of the Miraka milk company in Taupo which was set up by Maori interests with an overseas food group as a cornerstone shareholder, with power supplied from Maori geothermal assets and much of the milk supply sourced from local Maori farms.

"It is a bit like Miraka with a group of Maori entities and farms coming together, investing and supplying the milk and getting to know how things work in the whole value chain rather than just being suppliers of milk and not having anything to do with it after that," said project coordinator Richard Jones, who is chief executive of Kawerau Dairy shareholder Poutama. "For Maori, it's about getting more experienced and becoming more involved."

Jones said Kawerau Dairy's product mix will be different to Miraka's and will be complementary rather than competing, with both leveraging their cultural identity.

Stage one of the project involves the development of an 800 kilogram per hour drier to process conventional cow milk and organic cow milk into high-value products.

Initially, it expects to produce milk protein concentrate 85, a soluble powder consisting of 85 percent protein and low levels of lactose for use as an ingredient in health drinks and foodstuffs, as well as organic whole milk powder and skim milk powders, and organic milk protein concentrate.

The Organic Dairy Hub will supply milk to the plant, and will help any of the 12 Maori shareholder farms convert to organics.

"Some of them have indicated they are interested in looking at the conversion process. We see us going more down the organic track over time," Jones said.

Once the first stage is established and generating a sustainable return on investment, the group will embark on a second stage involving the development of another drier to process goat and sheep milk. They are also considering producing plant-based milk from oats and making butter.

Over a season, the plant is expected to be able to produce more than 8,000 metric tonnes of dried milk products.

The plant will be developed on land owned by Putauaki Trust with its principal energy supply sourced from the Ngati Tuwharetoa Geothermal Assets owned geothermal network. The venture is also exploring the use of additional solar energy for its plant and for its milk suppliers, with analysis currently underway by Vietnamese company SolarBK.

Kawerau Dairy will benefit from its Japanese shareholder's food processing experience, and Cedenco already owns vegetable processing and marine farming and mussel processing operations in New Zealand. They will also be a customer for the dairy company, helping get its products to Japan and possibly China with its existing market links.

"Cedenco was very pleased to be provided the opportunity to partner with the Kawerau investor group to establish the new facility," said Cedenco Foods New Zealand managing director Tim Chrisp. "Our Japanese parents Imanaka have a thriving dairy products business and a long standing interest in investing in the New Zealand dairy industry. The investment is a great fit for the Cedenco group alongside our food manufacturing interests in horticulture and aquaculture and will enable us to widen our portfolio of original New Zealand made ingredients."

Japan and the US are expected to be Kawerau Dairy's key export markets initially, and it may also sell into the local market although it doesn't expect to have its own consumer brands at the outset.

The venture expects to create between 25 to 30 direct jobs initially and that related business opportunities will stoke further job growth.

"That's one of the key drivers," Jones said. "The shareholders want to help create employment around the Eastern Bay of Plenty region."

The Maori entities who are collaborating for the project include Te Manawa o Tuhoe, Maori Investments, Putauaki Trust, Ngati Makino, Rotoiti 15, Tataiwhetu Lands Trust, Tapuika Holdings Ltd, Rotoma No.1 Inc, Wharepi Whanau Trust, Omataroa Rangitaiki No.2 Trust and Poutama.