A high-process electrode boiler will be installed at the Open Country Awarua site and Open Country is aiming to be coal-free by 2025.
A buoyant Open Country, celebrating 20 years in business, is showing high confidence in the dairy industry by spending tens of millions of dollars on two processing plants at each end of the country.
“We are investing when most other people in the industry are being quite conservative,” says Open Country chief executive Mark de Lautour. “We know New Zealand milk production is the best in the world from an efficiency point of view.
“We have a phenomenal raw material, and it’s up to us to have capacity to capture the value of protein and fat.
“I know prices are depressed, China is not buying, there’s a war in Ukraine and tension in the Middle East. This is a time to invest and when the curve moves and markets improve, we are well placed.”
De Lautour says when China starts buying, the rest of the world is short of dairy product. “The world needs to eat and wherever we look there are opportunities.
“There’s lots of talk about India, and the African continent over the next 20 to 30 years. China remains a great opportunity - if you graph it long-term, the middle class will continue to grow and want good food.
“New Zealand has a good relationship with southeast Asia which is geographically close. Australia is an opportunity -their dairy industry is struggling to maintain production with the climate pressures. That’s a large, close market.”
De Lautour says New Zealanders have a “fantastic” habit of getting together and talking prospects down. “We strive every day not to do this. We are not being naive - it’s easy to see the doom and gloom without focusing on the potential opportunities.
“The world is going from drinking milk to eating milk - cheese, butter, protein bars are becoming more popular and for a country like New Zealand that’s a fantastic trend.
“Some of our suppliers are the most commercial and entrepreneurial farmers in the country, and we are helping them improve efficiency and increase production as we invest more.”
Open Country, wholly owned by Talley’s Group and the country’s second largest milk processor, is operating at capacity in its butter and cheese facilities, and plans to double production.
“We see ourselves as a cheese company that does milk powder as well,” says de Lautour.
Open Country, with more than 1000 farmer suppliers, manufactures 300,000 tonnes of milk powder and 50,000 tonnes of cheese in 25kg blocks and sends most of the dairy ingredients to wholesale and foodservice markets in 60 countries.
Its main cheese markets are Japan, Middle East and Australia.
Open Country doesn’t handle consumer retail brands.
A new butter plant is being built at the original Waharoa site near Matamata and will be opened next September, while the larger cheese plant at the Awarua site near Invercargill will be completed by the end of 2027.
A new frozen milk concentrate plant at Awarua will be ready for commercial production in November.
De Lautour says the new butter plant will give Open Country more options. “We can see where the markets are, who’s paying the most for proteins and decide on the optimum mix involving whole milk powder, skim milk powder, anhydrous milk fat, butter and cheese.
“We believe the second cheese factory (at Awarua) will allow us to do more and capture value. The dairy industry is all about how much value you can maximise out of fat and protein.”
Open Country began operating in 2004 with the first cheese plant at Waharoa and two farmer suppliers. It merged with Dairy Trust in 2008 and by then two powder plants had been installed at Waharoa and Awarua.
In 2021 family-owned Talley’s Group took over Open Country after buying out Singapore Olam International’s 15.1%. Talley’s, one of the country’s largest food exporters, specialising in seafood, vegetables and icecream, could add grunt to Open Country. It also owns Affco New Zealand meat processing company.
As well as Waharoa and Awarua, now with three milk powder driers, Open Country has two other sites - Horoitiu near Hamilton with two skim milk and whole milk dryers, and Whanganui two driers and concentrating on specialty powders fortified with vitamins. Open Country’s total staff is 700 including 300 tanker drivers.
De Lautour has been Open Country chief executive for 15 months after spending the previous six years with Affco in sales, supply chain and logistics management roles. Before that, he was the Sealord export sales manager for three years.
Born in Kaeo, Far North, de Lautour lived in 14 different places as his school teacher father took up new positions. He set up a school in the Cook Islands, and de Lautour spent his teenage years in Whakatāne when his father was principal of Trident High School.
De Lautour gained a BSc (tech) degree from Waikato University and was recruited into the Fletcher Challenge graduate programme. “It was 1993 when Fletcher was at the peak of its powers and they took in 12 graduates each year.
“I was sent to Tasman Forestry and they threw me a hi-vis vest and chainsaw and I worked with the harvesting gang. I was lucky, I survived the nine months - but a few law graduates with honours degrees didn’t.”
De Lautour says the programme taught him to “realise what you are asking people to do and to have empathy with the task they are doing”.
De Latour spent 20 years working in the timber processing industry for Carter Holt Harvey and Fletcher Challenge. For three of those years he was based in Annapolis, Maryland as a sales manager for Fletcher which had two joint ventures with retail distributors. Before that, he ran the Taupō Remanufacturing (now called Tenon) site making moulds for door sashes and window frames. “I guess I’ve been very much involved in the manufacturing primary industry.”
He is now focusing on making Open Country as effective as possible. “We are investing in processing capacity because we are going to need more supply.
“We have smaller suppliers in the Waikato to large commercial farms in Southland producing millions of kilograms a year, and they see the value of working with us and keeping their independence.
“The difference between us and Fonterra as a co-operative is that we have no mandate to tell our farmer suppliers how to farm. As long as they comply with legislation, we will collect their milk.”
Open Country is paying a farmgate milk price of $8.40 per kgMS at the end of August and most probably $8.30 in November. The quarterly payments are fully paid up rather than following other dairy companies’ practice of advancing 70% of the forecast price and then doing a wash-up later.
Open Country has established a sustainability team to help reduce greenhouse gas emissions in the agriculture sector. “We are proud that a significant majority of our farmers have known audited carbon footprints,” says de Lautour.
The 75 tankers owned by the company and operating 24/7 run on lower emissions Euro 6 diesel engines — “the most efficient truck fleet in the country,” says de Lautour.
Open Country is installing a high-pressure electrode boiler and three high temperature heat pumps at Awarua to accelerate its decarbonisation journey. Two boilers at Waharoa are running on wood pellets, while natural gas is used at Horotiu and Whanganui.
The company aims to be coal free by 2025, reducing 41,115 tonnes of carbon emissions a year and equivalent to removing 17,175 cars from the road per year. The existing coal boilers will be maintained for dry year flexibility.
De Lautour says there’s “lies, damn lies and statistics” attached to the 50% of carbon emissions being generated by the agriculture sector.
“We only have 5.5 million people living in New Zealand, we don’t drive many cars and most of our energy generation is hydro. We don’t have heavy industry like car manufacturers. We don’t have a large carbon footprint.
“In reality, the statistics show our emissions are agriculture-based and with our low population it looks like we are very poor.
“Emissions are very much a measure of efficiency and our emissions per kilogram of food product is very low,” he says.
“We are proud of our carbon footprint. That’s not to say we can’t do better with methane emissions. But New Zealand is being cast as the pariah and reducing the footprint by 30% is naive and irrational.
“We need to celebrate how efficient we are and agree there are some things to improve on - but let’s do it under the umbrella of improving productivity and efficiency even more,” says de Lautour.
Open Country is an advertising sponsor of the Herald’s Agribusiness and Trade report.
