Synlait’s farming model sparks investor interest

Fonterra's newest rival, Synlait Investments, was initiated when dairy farming partners Ben Dingle and his partner Juliet Maclean, a Nuffield scholar, started looking for expansion opportunities.

They were farming in the Waikato and Northland and were friends with dairy scientist John Penno, based at Ruakura near Hamilton.

"We knew we could work together and thought we could buy a farm, rack up production and sell it," said Dingle, who is chief operating officer for Synlait.

They bought an 870ha sheep and beef farm, Robindale, near Hororata in Canterbury, in 2000, shortly before a dairy company moratorium on new suppliers was lifted, and converted it to milk 3300 cows.

"There was a big question mark over water availability," he said. "The perception was that we were taking a big risk, but we found water, sourced capital and the moratorium came off at the same time."

The three friends then decided to create an international dairy business and 18 months ago invited former Finance Minister Ruth Richardson to join their board.

"We firmly believe there is a place in New Zealand for this type of operation, which involves building equity partnerships and giving farmers the opportunity to have a stake in the industry," Dingle said.

Synlait has an average stake of about 30 per cent in each of its farms. It also has management contracts with each of the businesses, which are operated by "equity managers" - farmers who have a stake of about 10 per cent.

When Synlait looks for outside investors to boost capital funding, it is expected to offer separate investments in the farms and its manufacturing and marketing arm.

He said the company's founding directors were also in the business for the challenge: "We don't farm to be average. We have high expectations."

Next season the Synlait operation will milk a total of 9500 cows off 2800ha, producing 45 million litres of milk (equivalent to 3.75 million kg milksolids). Its farms average 1400kg milksolids/ha or 380kg-400kg milksolids/cow. The venture has so far established four other farms within a 15km radius, in addition to the original Robindale Dairies, including:

* Terraceview, 150ha milking 650 cows;

* Ngamarua, 370ha milking 1500 cows;

* Riverlands, 525ha milking 1800 cows; and

* Moreton Marsh, 308ha milking 1150 cows.

Decade Dairies, a 150ha farm near Ashburton, milking 520, will be added to the company on June 1, along with another farm, currently held by one of a number of companies run by Mr Penno under the business name Delaborin, an acronym for the partners' first farm.

That farm, Robindale, is the largest single-site dairy operation in the country - milking 12 hours a day through an 80-bail rotary platform.

Farm staff work a six-days-on, two-off roster averaging about 50 hours a week, with no one working more than three hours at any milking.

- NZPA