Louis Dreyfus Company Dairy Asia Pte Ltd., a wholly owned subsidiary of Louis Dreyfus Asia, announced it has agreed to a joint venture with Australia’s privately-owned Midfield Group for the construction, development, and operation of a dairy processing plant in Penola, South Australia.
The plant which is currently under construction, is expected to be completed by July 2017, at which time it will have an annual processing capacity of 220 million liters of raw milk into skim milk powder, whole milk powder, AMF, and cream for both Australia’s domestic and export markets, according to Colin McKenna, managing director and owner of The Midfield Group, reports 3YB.
“The decision we took to engage in this joint venture is certainly very strategic,” said McKenna in a company statement. ”We at Midfield are confident and accomplished in our manufacturing capabilities and have the added benefit of being milk producers too. The joint venture partnership will, therefore, provide us with market intelligence and an immediate competitive presence in global markets, enabling us to add significant value and advantage to our Australian raw milk producers, our dairy farmers.”
The venture is of a strategic nature for Louis Dreyfus as well. Low commodity prices, high carry-over stocks, and economic woes in emerging markets have posed significant challenges for global commodity traders in recent years.
To strengthen its business in the face of such challenges, Bloomberg reported in January of this year that Louis Dreyfus had made it known that it was seeking out joint venture projects in non-core business areas – a plan referred to internally as “Vision 2025.”
An expansion into dairy at this juncture may seem ill-advised to some as global dairy prices have plummeted amid a prolonged rout. However, Daniel Aarons, director of operations for Midfield Group told the Weekly Times Now that the group was confident in its decision as it was “looking long term.”
This is a sentiment echoed by Louis Dreyfus. Jean-Marc Foucher, Head, Dairy Platform, Louis Dreyfus Company comments in a recent release, “The continuous demand for quality products, the recognition of Australian milk and dairy products around the globe, as well as efficient farming and processing operations provide a very positive outlook for all participants, from farmer to processor and exporter.”
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Lynda Kiernan