Under a partnership with agricultural commodity trader Louis Dreyfus, Midfield said 100 per cent of their product would have a home from their first day of exporting.
Director of dairy operations at Midfield, Daniel Aarons said the group was «getting a very good deal».
The company planned to export milk powder and fats internationally and also indicated 40 new full-time jobs would be created over the next six months.
At an estimate, 50 to 100 dairy farmers would be contracted to supply 220 million litres — almost all of the milk produced in South Australia’s south-east — for stage one of the plant.
Stage two, likely to ramp up over the next year and a half, would likely call for double this quantity.
Mr Aarons indicated in the first instance that the company would like to deal with as many local farmers as possible.
«We don’t need the supply until 1 July next year, however we’re not going to leave the formalities until the week before.
«Certainly we anticipate formalising some of those arrangements with suppliers in the first half of 2017.»
No ‘claw back’
Over the coming weeks, the company will sit down with dairy farmers to workshop milk supply models that work for both the processor and farmer.
«A very important factor that we’re focusing on is the claw back,» Mr Aarons said.
«We have an ethical issue with that; we may mandate that there will be no claw back in our model or there will be a guaranteed minimum base price.»
In the past, the company has indicated they would «meet the market» plus add a premium.
Mr Aarons said given the depression of the global dairy market, a premium price was still a possibility, but not a guarantee.
«But certainly, the concept of a premium is on the table [and] we’re very open to that.»
Volatile global market
Mr Aarons indicated that one could not avoid the obvious point that the milk powder export market was very volatile, despite recent signs of improvement.
«You have good years, you have bad years [and it] seems to be we’re seeing signs of improvement at the moment,» he said.
«We’re very optimistic, however we’re under no illusion there will be some difficult years going forward.»
Interest from local dairy farmers
At a recent open day at the Penola plant, the company met with hundreds of dairy farmers to send a message the company was serious about business.
Compton Dairy’s Charles Wallis was among the prospective suppliers and said the purpose of the day was to show that the company was «genuine in what they’re about».
Mr Wallis said the current way farmers were paid was «essentially sending farmers broke» and farmers were particularly interested in discussing a creative approach to contracting.
«That’s the way I think they will attract supply and retain supply,» he said.
Source: ABC
Link: http://www.abc.net.au/news/2016-09-06/midfield-louis-dreyfus-partnership-will-give-milk-exports-a-home/7818752
