Synlait aims to double production

Milk powder producer Synlait is waiting for consents to double its factory size to allow it to process three million litres of milk a day, but it will need extra capital. The expansionary Dunsandel company has in the meantime been signing up extra Canterbury dairy farmers for the 2009-10 season. The milk processor started production at its $80 million milk powder plant in August and in the next few years is expected to try to raise capital from investors for new production reports Stuff. Chief executive John Penno said it was confident of gaining council consents to allow it to expand the plant, which could now process about 1.6 million litres of milk a day.  Mr Penno said the company had confidence to double in size because of its good relations with farmers and the fact that production was being exported, rather than stockpiled despite a fall in prices in the past six months. Rival milk processing giant Fonterra has reportedly been buying up warehousing space in the North Island to stockpile milk powder. Mr Penno said Synlait continued to sign up dairy farmers, meaning the plant would be handling even bigger throughflows in the 2009-10 season."We would anticipate we'll be processing about half as much again from independent [suppliers] in this coming year, as we are in the current year. We've had about 40 in this current year. We'll probably go up to 60." Synlait was helping farmers review costs to "make sure there's a margin there at lower [international] milk prices". Commentators were now saying volatility in dairy prices would continue but those price swings "hasn't shaken our confidence in the industry, or what we're doing", Mr Penno said. "Fundamentally the world's still short of food."Prices would eventually settle higher than they had been trading at for most of the past 10 years. Japanese trading giant Mitsui has a 22.5% stake in Synlait, bought for $30 million, and acts as an export agent.