Supply shored up

The company is expecting to process 400million litres in the next financial year for domestic and export markets.

‘‘We can have our direct farms, great, but we also need a bit more scale which can come through some larger farms (such as Coomboona),’’ Mr Macleod said.

The dairy, located near Undera, was purchased by Australian Farm Milk Holdings in January, with Freedom Foods paying 10 per cent of the purchase price for the dairy or $4.7million.

Freedom Foods currently owns a 10 per cent equity share in AFMH.

Although some have voiced concern about the viability of the dairy industry in northern Victoria, Mr Macleod is confident in the company’s ability to ride through the wave of poor conditions and falling production.

‘‘You’ve got to be prepared to invest because nothing comes easy. Building these things, it takes years. So you’ve got to be prepared to work through that and accept that there’s going to be ups and downs, there will be the occasional dry period, that’s the nature of agriculture,’’ he said.

‘‘We’re not a billion-plus-litre business in northern Victoria. We don’t need that much milk, so I think as a result we should be able to sustain ourselves in this region.’’

While a 100 million litre deal with Australian Consolidated Milk has been a key component of Freedom Foods’ supply and is expected to continue, there has been a concerted effort in the past 18 months to grow the company’s direct supply and reduce its reliance on the deal, according to Mr Macleod.

Pointing to the company’s history of paying a premium above standard industry farm gate prices, Mr Macleod said a focus on consistent and quality supply had delivered security moving forward.

The $33million expansion to the company’s UHT facility in Shepparton, set to be completed soon, will double the capacity to 250million litres, while the new nutritionals plant is already in production.

About 60 per cent of the product processed at the UHT facility will be sold domestically, with the remaining 40 per cent to be sent into export markets, mainly China.

The Shepparton plants will see up to 250 people employed at the Old Dookie Rd facilities.

The nutritionals plant, which will produce protein and dietary supplements including whey protein isolates and micellar casein, is a sign of things to come from the processor, which is seeking to grow overseas markets in China and South-East Asia and shift its focus towards higher value products including yoghurt, cream, cereals and snacks.

‘‘When you get the scale, it’s about saying how do you maximise the core of your business?’’ Mr Macleod said.

‘‘And particularly in dairy, you’ve got the opportunity to take milk that in its plainest form goes into a bottle or a UHT pack — but those excess protein streams and cream streams are very valuable, if you can add more through these type of capabilities.’’