18/05/2018 - 14:42

Brownes moves to secure supply

18/05/2018 - 14:42

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Brownes Dairy is chasing extra supplies for its expanded cheese factory in the state’s South West and is believed to have approached the Lactanz cooperative and two farmers who were told last year their milk wasn’t needed.

Brownes moves to secure supply
Tony Girgis says the Chinese milk market is growing at about 6 per cent annually. Photo: Attila Csaszar

Brownes Dairy is chasing extra supplies for its expanded cheese factory in the state’s South West and is believed to have approached the Lactanz cooperative and two farmers who were told in 2016 their milk wasn’t needed.

Brownes axed the contracts of suppliers Graham Manning, Tony Ferraro and Dale Hanks to help reduce a large surplus of spring-time milk supply, leaving the farmers with no choice other than to dispose of thousands of litres of the unwanted product.

Western Australia’s oldest dairy is now aiming to secure about 30 million litres of new milk, with growing demand for a cheap product to supply its recently reopened cheese making facility in Brunswick.

Chinese dairy giant Shanghai Ground Food Tech purchased Brownes in December and invested $10 million to restart the mothballed Brunswick Cheese Factory.

Addressing a Committee for Economic Development of Australia forum last week, Brownes chief executive Tony Girgis said the Chinese milk market was growing at around 6 per cent annually, well above the domestic rate of 1 per cent.

Cheese growth was even higher, at around 17 per cent.

He said the market was becoming highly competitive, with producers needing a compelling proposition to differentiate themselves from other players.

However, Brownes will first need to secure new milk supply for its cheese production.

The company stands to lose about 12 million litres of milk supply in coming months with Busselton farmers Ed Cox and Larry Brennan, and Waroona farmers Luke and Vicky Fitzpatrick understood to have decided against renewing their contracts with Brownes.

However, it plans to secure new supply from its old and existing producers, as well as eying-off the potential to acquire 20 million litres from Lactanz Dairies when the cooperative’s contract with Harvey Fresh finishes on June 30.

Mr Manning told Business News Brownes had offered him a new contract during a visit to his farm in Harvey last month.

It is also understood Brownes had offered a new contract to the Ferraro family of Yarloop and had spoken with Lactanz, after the cooperative's contract with Harvey Fresh was not renewed, to pursue a rumoured 40 million litre growth strategy.

At full capacity, in three to five years’ time, the Brunswick factory will manufacture up to 6,000 tonnes of cheese a year, using 60 million litres of milk, equivalent to 15 per cent of the state’s current annual supply.

Most of the cheese produced would be exported to Brownes’ parent company in China.

“I rang Brownes and told them I was looking to sell the farm, and their supply manager offered to visit me at my farm to talk,” Mr Manning said.

“During discussions, Brownes asked me if I was interested in taking about 230 cows from one of their nearby suppliers who were planning on leaving the industry.

“I was thinking … how ironic it is now they want my milk, whereas only two years ago they weren’t prepared to take my milk at a 10 cents a litre discount rate of 35 cents a litre.”

Mr Ferraro said his sons Paul (who now run the farm) and Ritchie have not yet responded to the offer.

Brownes declined to comment.

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