16 Mar 2010

Taranaki organic dairy co-op in receivership

5:18 pm on 16 March 2010

A Taranaki-based organic dairy co-operative has been placed in receivership just six months after its cheese-processing factory began operating.

The NZ Organic Dairy Co-operative had been operating since 2004, but had been using a third party to process the milk into cheese for export.

It had converted an old cheese factory at Okato, and began processing the product in September last year.

The company had plans to build another factory in Waikato, which would also have taken milk from suppliers in Bay of Plenty.

Auckland-based Corporate Finance has been appointed as receivers.

The co-operative has about 30 farmers supplying the milk. They have been written to, outlining options available to them.

Fonterra offer

However, Fonterra is offering to take milk from the co-operative's suppliers.

Fonterra's general manager of milk supply, Tim Deane, expects to have about three quarters of the 23 suppliers it has contacted signed up by the end of the week.

"It's good for our existing shareholders because we'll get additional milk supply, which improves our fixed cost recovery; we'll get additional share capital in which strengthens our balance sheet; and then once we've gone through the process of ensuring that the organic supply is fully certified, we'll get increased organic supply."

He says the new suppliers will initially be offered contracts for the rest of the season, receiving Fonterra's current price less 10 cents per kilogram of milk solids, with no organic premium.