ORGANIC Dairy Farmers Australia is building a $10 million plant for manufacturing organic butter and cream and bottling milk at its Geelong factory.
ODFA chief executive officer Stewart Price said the new butter, cream and bottling lines were sited inside the existing factory bought four years ago in the relocation to Geelong.
It comes on top of a $55 million organic milk powder drying plant being built next-door as part of a joint venture with Wattle Health Australia.
Mr Price said the butter manufacturing and packing operation would be operational within the next month and the dryer should be running by spring next year.
The State Government contributed $1.9 million towards the butter, cream and milk bottling plant, which is wholly owned by the dairy farmers co-operative.
Mr Price said the combined operation would be dedicated to processing organic dairy products.
“We want to make Geelong the organic hub for dairy,” he said.
“They key thing for us is to be able to provide a fully integrated supply chain from the farmer right through to the end consumer.”
The dairy co-operative is the largest producer of organic milk in Australia, accounting for about 35 million litres of an industry total of 50 million litres.
It currently has about 50 dairy farm suppliers, with more coming on stream in the coming years as they fulfil organic status.
Mr Price said ODFA had aligned the new plant construction with the expected increase in organic milk production as new farmers joined the co-operative.
“We didn’t want to have an asset before the volume was there and we did not want to have volume without the plant being there,” he said.
“So it is all aligned with spring next year.”
Mr Price said global demand for organic dairy products was at the highest level ever seen.
“Internationally, organic dairy is growing at about 15 per cent annually in the US and Europe,” he said
“At this point, there is still not enough supply to meet demand.
“And particularly with our partner in Wattle Health, the demand they are getting in sales in India, Vietnam and China certainly is enough to support what we are doing.
“Even with our existing relationships with Parmalat and five am, we require more milk.”
While ODFA’s cornerstone customers — Parmalat, five am and Lemnos — have experienced strong growth in organic dairy products, the co-operative has also seen a 23 per cent rise in butter demand during the past year and 54 per cent growth in its soft cheese range from a small base.
“So part of it is making sure we can maintain our current products and customer relationships and allow those products to grow, then seek further supply of milk that is going to be required for our new customers such as Wattle Heatlh,” Mr Price said.
“What we are finding is that the more demand we satisfy creates more demand.
“It is an evolutionary circle which is growing out.
“And the key to all this is about increasing farmer returns.”