Gray Wigg farm sale puts pressure on Saputo’s Gippsland milk processing plants

AN EXPECTED exodus of milk from Saputo to Fonterra with the sale of farms from the Gray Wigg Pty Ltd farm group may put pressure on the Canadian processor’s Leongatha plant, not the Maffra factory as first mooted.

A dairy industry source told The Weekly Times both of Saputo’s Gippsland plants need redevelopment but there was not enough milk to justify the capital expenditure on each.

The source, who did not wish to be named, said Saputo was probably trying to figure out which one to keep and which should be mothballed.

“They need to make a choice as to which one they should upgrade,” he said.

“And it probably should be Maffra.

“It’s an easier factory to upgrade in terms of site, layout and scale.

“Leongatha is largely a packaging factory for low value UHT milk.

“Leongatha is not a cheese factory, where Saputo’s focus is.”

The comments come after two other dairy industry sources told The Weekly Times last week milk from the Gray Wigg farms at Nambrok was likely to be sent to Fonterra, with the buyer of the properties, Canadian pension fund Public Sector Pension Investment Board, having strong ties to the New Zealand processor.

That would mean a loss of about 30 million litres from Saputo’s supply if the farms switched milk pick-up to Fonterra.

Gray Wigg is believed to be the biggest supplier to Saputo’s Maffra plant and the loss of the milk was expected to put pressure on the company’s Gippsland processing operations.

The Canadian processor shut closed the Maffra plant for five months earlier this year due to a shortage of milk.

The industry source said that, while the Leongatha plant was closer to Melbourne and the bulk of the southern milk pool, Maffra would allow Saputo to draw milk out of the south coast of NSW and challenge Bega Cheese.

He said Maffra produced anhydrous milk fat, butter, skim milk powder and whole milk powder.

“It was the ugly duckling in the old Murray Goulburn network,” he said.

“But it’s probably got some of the biggest freezing capacity of any food factory in Australia.”

Original article sourced from https://www.weeklytimesnow.com.au/

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