Fonterra rival forging ahead

Independent dairy company Open Country Cheese has successfully met all its targets for its first season and is gearing up to expand its production, says chief executive Alan Walters.

An export rival to Fonterra, Open Country was launched last year by former National MP Wyatt Creech.

The business is based around a re-fitted dairy factory - at Waharoa in the Waikato - which produces Cheddar cheese for export to commodity markets.

In its first season Open Country produced more than 6000 tonnes of cheese which was sold into markets such as Australia, the Middle East and the West Indies, Walters said.

Fonterra still has a monopoly on New Zealand's export quota to Europe and the US until 2007.

Open Country will not report financial results until next month. Its first financial year ended on May 31.

Although it was not a listed company it did have 500 shareholders to report to, Walters said.

During the first season production had been limited by the company's ability to process the cheese byproduct whey.

A new whey plant being built at the factory site would make it economically viable to process much greater volumes, Walters said.

The goal was to lift total cheese production to 8000 tonnes.

To ensure milk supply the company was setting up exclusive arrangements with local farmers.

"This year we've taken on 25 farms," Walters said.

The plan was to grow the supplier base so the company was no longer dependent on Fonterra for its milk supply.

This year the two companies were involved in a Commerce Commission dispute over milk freight costs.

A draft determination by the commission found in favour of Open Country.

So far most of the exported cheese had gone straight on to commodity markets but the aim was to get more cheese directly into the more lucrative retail sector.

That did not necessarily mean developing or branding its own products, Walters said. It did mean being more focused on which markets it picked to sell to and would involve developing different styles of cheese.

Open Country has also started selling some of its cheese on the domestic market - at the Matamata supermarket - as a way to let locals try the product.