Fonterra to boost production at Cobden milk processing plant

New Zealand dairy exporter Fonterra plans to boost production at its milk processing plant in Cobden, south-west Victoria, Australia, with an investment of $30m.

The proposed expansion comes after the co-operative secured a deal from retailer Woolworths to supply and process milk.

The expansion, which will add 30 new jobs at the site, will have positive flow-on effects for farmers and communities in south-west Victoria, Fonterra noted.

The upgraded facility is expected to go onstream in early 2015.

As part of the contract, Fonterra will process Woolworths own-brand milk in Victoria for the next ten years.

The contract will allow Fonterra to expand its existing white milk portfolio, complementing its Riverina Fresh milk business in New South Wales. It is expected to provide certainty for farmers, allowing them to invest on farm and increase their milk production.

Fonterra Australia managing director Judith Swales said, "Using Fonterra’s global innovation leadership and the high-quality milk from our farmers, we can optimise the freshness and shelf life of milk to ensure a better product for Woolworths Victorian customers."

Woolworths supermarkets managing director Tjeerd Jegen said that the new contract will be a win for farmers, Woolworths customers and Victoria.

"We want farmers and Fonterra to provide quality milk for our customers. Fonterra has told us that with the certainty of a long-term contract they and their farmers can invest and innovate," Jegen added.

The parties will continue to work closely to finalise contractual deals and reach a binding supply agreement.