Fonterra will shut a milk powder canning and packaging facility in New Zealand’s North Island as the dairy co-operative readies for a planned divestment of its consumer business.
The Canpac site in Hamilton, which blends and packages milk powders, will cease operations on 31 July.
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It handles up to 4,000 metric tonnes of product annually, representing less than 1% of the co-operative’s total volume, Fonterra said in a statement.
Fonterra COO Anna Palairet said that “low product volumes and increasing complexities in production has created challenging economic conditions for the facility”.
She added: “Our strategy is about creating end-to-end value and growing total returns for our farmer shareholders. We believe the best way to achieve this is to focus on our strengths and scale in ingredients and foodservice, and we are prioritising our investment on the parts of our operations that are better suited to this.”
The facility employs around 120 people.
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By GlobalDataThe dairy giant said it will “work through a consultation process”, including potential redeployment opportunities for affected staff before operations conclude at the Canpac plant.
The latest move is part of Fonterra’s shift to focus on its “higher value” ingredients business, including advanced proteins and medical nutrition, as it prepares to spin-off the global consumer and associated businesses.
Fonterra gave a new corporate identity to its consumer-facing business in February.
Subsequently, in March, the co-operative started roadshow meetings with “potential” investors as part of the divestment process for its global consumer and associated businesses.
Fonterra has already trimmed parts of its global consumer operations in recent years.
In April last year, the co-op said it had agreed to sell its minority stake in Lithuanian dairy business Rokiškio Sūris amid a “strategic long-term review of investments”.
In December 2022, Fonterra exited its Brazilian dairy joint venture with Nestlé, Dairy Partners Americas (DPA), where it held a 51% stake.
That same year, the company sold its Chile unit Soprole and scrapped India dairy venture, Fonterra Future Dairy.
