Synlait, the Canterbury corporate dairy farmer, has been hunting for capital since it began making milk powder two years ago. It’s already an unmistakeable site on State Highway One about 30 mins south of Christchurch. The plant handles 300 million litres of milk from its own farms and supplies from rival Fonterra, as required under the dairy industry deregulation that spawned Synlait.
Synlait has now secured an $82m injection from China’s Bright Dairy, taking a majority stake in the company, already 22 percent owed by Japanese coporate Mitsui. Subject to regulatory and shareholder approval, Bright Dairy’s capital will see Synlait’s milk powder output doubled by 2011/12 .
This lines up neatly with the Government’s announced agenda to see new water allocations flowing in Canterbury next year, long before any tough new environmental controls can be put in place. You can’t help but believe the Synlait injection wasn’t in Government’s mind – Ruth Richardson is on the Synlait board – with its axing of Environment Canterbury’s elected councillors who were among those concerned at the deteriorating water quality, most particularly in the area around where Synlait’s milk plant is centred.
Dunsandel township, just up the road from the existing plant, has had e-coli in its water supply for the past year. Synlait wants to double production and later double it again. Little wonder it has invested in the Central Plains Water project, which, despite occasional attempts to mask its purpose, is designed to create more water for dairying. Fonterra is also intent on using the CPW scheme to create milk for a brand new $100m plant it is planning at Darfield, to the norwest of Dunsandel.
So a new wall of milk is coming fast, with little prospect of tough new environmental rules in the same timeframe. Little wonder, water is now identified as the number one issue in Canterbury. Nick Smith is in Christchurch tomorrow for a major announcement on water issues, so perhaps he comes with soothing words. Trouble is, milk comes ahead of water as far as his Cabinet colleagues are concerned.
We shall have to respectfully disagree then Loota…
So we shall.
Aw