Oceania's 170 million milk litre milk supply surpasses initial target

Oceania Dairy has signed up 46 milk suppliers for its first season.

In August, they are due to start sending milk to the new $210 million milk-drying plant just north of Glenavy, South Canterbury.

The factory is being built for the China's Inner Mongolia Yili Industrial Group, which in April last year bought the 38ha site and resource consents from Oceania Dairy.

The latter said in a statement the initial supply target of 130 million litres has been surpassed, with contracts signed for 170 million litres in the 2014-15 season.

Chief executive Aidan Johnstone said the company was delighted with the dairying community's support.

''The response from local farmers has been extremely positive and their strong interest in supplying Oceania has resulted in us exceeding our target milk supply volume.''

The factory would operate at about 65% of capacity in its first year, producing 30,000 tonnes of milk powder. At full production, the annual output would be 47,000 tonnes.

Oceania Dairy signed its first milk supply agreement for the factory late last year with local dairy pioneers Aad and Wilma van Leeuwen, who represent a group of foundation suppliers from 20 individual farms.

There had since been keen inquiries from farmers in the South Canterbury-North Otago region, which was Oceania's natural catchment, the company said. It had identified farms within a 50km radius of the Glenavy factory as its ''home'' collection area.

''All of our milk supply contracts are with farmers within our targeted collection area,'' Mr Johnstone said.

''That includes seven new dairy conversions for the 2014-15 season.''

The agreements are for a minimum of three years.