Fonterra is closing its milk powder plant at its Brightwater site near Nelson in April 2023, with a loss of 30 jobs, as it grapples with declining milk supply.
The small, ageing plant processes about 0.25% of Fonterra’s overall milk supply into whole milk powder.
The move, which will mean the milk is processed at Fonterra’s Darfield site near Christchurch, is in line with Fonterra’s long-term strategy, said Fonterra chief operating officer Fraser Whineray.
“We know milk supply is declining over time, flat at best, so we need to make sure we’re getting the most out of every drop of milk and optimising our plants to match both consumer demand and available milk supply,” he said.
According to Fonterra, NZ’s milk supply has peaked and will now decline or remain flat as farmers grapple with climate change impacts, regulatory changes and alternative land uses.
Recent changes to its capital structure, which reduced the amount incoming farmers need to invest to supply Fonterra, are aimed at protecting its market share.
Also, its long-term strategy is to direct more milk into its food-service and consumer business, less into ingredients, and in some cases, to divert product away from the Global Dairy Trade auctions.
“This, along with forecast capital and maintenance costs, means we’ve made the tough decision to close our milk powder plant at Brightwater,” said Whineray.
Milk collection and associated activities will continue at Brightwater as Fonterra moves its milk transfer activities there from Tuamarina.
“It’s no doubt tough news for some of the Brightwater team and we’ll be working with them in the coming months on their future options, including redeployment opportunities within the co-op,” he said.