VDL Farms’ plans to export premium Tasmanian milk from Hobart direct to China have hit a few snags, but are still viable.
Production has ramped up to the point the business is now sending around 10,000 litres of milk to China each week, VDL farms chief executive Evan Rolley said.
“We started the process to identify farms that have low bulk milk cell counts, or very high quality milk [for the Chinese market],” Mr Rolley said.
“We’re ramping up the volume of milk production each month. We’re working up the supply chain and ramping up to scale,” he said.
VDL is trialling its systems between collection, transport, processing and packaging milk at the Lion organic processing facility in Glenorchy, and then registration and transportation to Melbourne across Bass Strait.
From Melbourne the milk goes direct to China before being certified and distributed to supermarkets.
“A sister company handles the milk in China, but we’re trying to go direct to customers rather than just going to supermarkets,” Mr Rolley said.
“It’s more of a step process, but it’s testing all the supply chain issues. It’s better to do it step by step and ensure it works,” he said.
Another hiccup is the Hobart airport upgrade, which was scheduled for completion last month, but has now been pushed back to early next year.
“To fly milk direct [to China], the upgrade is critical,” Mr Rolley said.
Testing the exporting system comes under the five-year $100 million investment parent company Moon Lake Investments committed to when buying VDL Farms in 2016.
VDL is also converting three of its 25 dairy farms to organic operation at Circular Head, with more conversions possible in the future with positive return on investment, Mr Rolley said.
“Mr Lu [Xianfeng] was looking to invest $100 million over five years. We’re 16 or 17 months into those five years and already have made a number of investments totalling $13 million,” he said.
Mr Rolley said investment was slower due to milk price cuts in 2015-16, but VDL maintained milk production and employment levels.
“Many farmers closed farms or reduced production, but we’ve increased milk production year-on-year and maintained employment. Mr Lu felt very aware of that commitment,” he said.
Mr Rolley sees that improved milk prices, ironing out export issues and organic certification will set VDL Farms up for success.
“Opportunities will present themselves and more investment will be rolled out,” Mr Rolley said.