Burra expanding in gloom ... ready for boom
Burra Foods has a new business partner and will develop specialised milk powder exports to boost farmgate returns.
The family-owned company will develop new premium products for the Asian export market in conjunction with ITOCHU Australia.
A long-term Burra Foods client, ITOCHU Australia will invest $38.25m in a deal that will see a milk powder plant built at the Korumburra factory. Production will commence in July 2010.
Burra Foods CEO Grant Crothers said: “Initially, we expect to produce approx 20,000 tonnes of milk powder a year, taking the site’s total production to some 40,000 tonnes. Subject to demand and our ability to attract milk a second plant might be built.
“Post-construction, we expect our workforce to grow from 80 to approximately 130,” he added.
Burra will continue to focus on value-added ingredients that command market premiums and sees the expansion into milk powders as complimentary to this strategy that has been the basis of its success.
Mr Crothers said Burra Foods’ reputation as a reliable supplier of dairy ingredient products to international food companies was an important factor attracting ITOCHU to invest.
He said he was excited about the next phase of growth in Burra Foods.
“We are delighted to have a new business partner in ITOCHU Corporation and ITOCHU Australia, who are focused on pursuing a global value-added food supply chain, ensuring safety and reliability,” he said. “We have been in this industry for three generations and, with this investment, that continues with Burra remaining controlled by the Crothers family.
“It is also satisfying to see continued investment in the Korumburra site following our 1991 acquisition of the site, a 1974 casualty of industry rationalisation.”
ITOCHU Australia started its business in Australia 50 years ago buying wool and now deals in purchasing iron ore and coal, grains, wood chips and foodstuffs.
The parent company, ITOCHU Corporation was founded in Japan in 1858, employs nearly 43,000 people worldwide and has an established global customer base.
Mr Crothers said: “Our goal is to build a better business model so to increase the milk price and grow the supply base – we know dairy farmers can respond to price signals and we intend to send them some as soon as possible.
“By linking the supply chain to such an integrated and successful international trader as ITOCHU, Burra Foods and its suppliers will be able to benefit enormously in this deal, giving a private, family business global clout.”
The Crothers family were advised on the transaction by Canterbury Partners and Deacons Lawyers.