Miraka, the baby of the multi-billion dollar New Zealand export dairy processing industry, is growing up fast.
Just three seasons old and with a $27 million UHT plant just weeks off commissioning, it is recruiting 40 more staff, and looking ahead to specialised milk proteins production.
Miraka, owned by a group of Maori trusts and incorporations and New Zealand dairy sales and marketing broker Global Dairy Network, with a 19 per cent stake held by customer, Vietnam’s Vinamilk, is a smart-looking operation far off the beaten track at Mokai, north of Taupo.
Unique in the industry in being powered by geothermal energy bought at commercial rates from a plant next door owned by shareholder the Tuaropaki Trust, Miraka is also different in other ways from the rest of the processing pack spawned by deregulation of the export dairy industry in 2001.
It is profitable, and has been from its first season, says chairman Kingi Smiler. The company declared a dividend to shareholder in its second season.
Such early and regular profitability makes Miraka unique among the new independent processors, Smiler says.
In keeping with its vision of sustainable business practices that will provide long term returns for current and future generations, the plant operates a closed-loop recycling system.
Chief executive Richard Wyeth says milkfat solids from the treatment plant go across the road to a massive worm farm. The worm castings in turn go to a native plant nursery from which the Maori trusts plant riparian waterways on their farms.
The company pays its suppliers 10c per kilogram of milksolids more than industry heavyweight Fonterra pays, Smiler says. Its farmers do not need to buy shares to supply Miraka, whose Pakeha suppliers well outnumber Maori producers.
Of the 10 Maori shareholder entities, six have farms which between them milk 20,000 cows.
Miraka is supplied by a total of around 50,000 cows. Other Maori trusts are knocking on Miraka’s door and it has a waiting list of potential suppliers but no capacity to take them right now, Wyeth says.
It’s a far cry from Miraka’s first season when the big fear was getting enough milk supply from the 80km radius collection area it had nominated to run the plant efficiently, he says.
The new UHT or long-life milk plant, which starts up in January, will be able to process 60 million litres a year. That equals about another 12,000 cows. While it will take «a few years» to build to that level, it means the company will be able to accept new milk supply for the 2015-2016 season, Wyeth says. Miraka only takes 50 per cent of the regulated priced milk from Fonterra it is entitled to under the Dairy Industry Restructuring Act 2001 (DIRA). Like other independents who can call on this regulated milk, Miraka has three more seasons in which to build its own supply before Fonterra’s DIRA milk obligation expires.
The UHT plant is being built a year ahead of the business plan. Hiring is underway to staff it. The recruitment drive will take the total payroll to 78 people.
The plant will be able to turn out 250 million 250ml packs of UHT milk a year. The major buyer of these will be Chinese company Shanghai Pengxin, purchaser of the central North Island Crafar farms estate and aspiring buyer of Canterbury’s Synlait Farms.
Smiler says it is part of Miraka’s business strategy to have a cornerstone customer for each step of its growth. The company exports to around 10 countries, including China and Vietnam.
Smiler and his board and Wyeth are now working on Miraka’s growth strategy for the next five to 10 years.
On their radar is commercialisation, hopefully in the next three years, of a Primary Growth Partnership milk proteins development project.
Parties to this $3.5 million investment programme include the Kanematsu trading company of Japan and major Miraka shareholder Wairarapa Moana Incorporation. The plan is to make the export milk proteins at Miraka, says Smiler.
«The next choices we have to make are on the level of investment we make which will add more value and sustainable value over time. We want to rely less and less on commodity product streams.
The UHT plant is the first step in that direction.
«We have to decide how large we want to grow. We have a big waiting list [to supply] the factory and we need to decide the best time to take the opportunities, and that is all underpinned by milk supply.»
Smiler attributes Miraka’s success to date to a «very clear, very cost-effective» business model, having broker Global Dairy Network working for it in the international marketplace, and not having much fat in the system.
STAKEHOLDERS
Miraka is majority Maori-owned. The owners include: Wairarapa Moana Tuaropaki Trust Waipapa 9 Trust Hauhangaroa Partnership Tauhara Moan Trust Huiarau Farms VinaMilk Vietnam.
Source: Stuff
