Kiwi Dairies' purchase of further South Island plants is the reason for a proposal to scale back a planned expansion at the Stirling cheese factory, says the Stirling site manager.
Tony Smith said plans had been well advanced for a $30 million plant upgrade for the coming financial year that
would have given Stirling the biggest single cheese line in Australasia.
But that had changed since Christmas because of Kiwi's purchase of plants at Marlborough, Kaikoura and the commissioning of a milk-powder plant at Brightwater, near Nelson.
"It would make no economic sense for the company to spend capital producing too much spare capacity," Mr Smith said.
The Stirling plant could now take 1.5 million litres of milk a day and the planned upgrade would have boosted that to 2.5 million litres.
The smaller upgrade, not yet fully costed, would take the plant to 1.9 million litres, Mr Smith said.
A decision on the smaller upgrade would be confirmed within a week to allow time to order plant from overseas. The new equipment would be installed from May onwards to be ready for the new season.
Forty new Stirling farmers were due to come in as milk suppliers. They and existing suppliers were expected to produce an extra 700,000 litres of milk a day.
The smaller upgrade would leave Stirling with a daily surplus of 250,000 litres.
Kiwi had established that shipping the surplus to Kiwi plants further north was cost-efficient.
The original upgrade to a 2.5 million litre capacity would still go ahead but as a staged project, Mr Smith said.
- NZPA
