Business as usual for Talleys after buyout of Singapore stake in Open Country Dairy

Nothing much changes for New Zealand’s second-biggest dairy company Open Country with the exit of Singapore’s Olam International and Talleys Group now firmly in the driving seat,but there’s plenty to do ahead, Andrew Talley says.

Family-owned Talleys has bought Olam’s 15.1 per cent share of Open Country for about NZ$80.9 million through a takeover offer earlier this year, taking the Motueka-based company’s holding to about 92 per cent.

“Nothing really changes – the company retains its underdog status and there’s plenty to do ahead,” said Talley, who has helped steer what began as a tiny cheese company in 2003 to become a serious competitor to industry cooperative juggernaut Fonterra following 2001 deregulation of dairy exporting.

Open Country’s revenue in 2020 was $1.6 billion, up from $1.4b in the 2019 financial year. After-tax profit for FY20 was $67.6m, up from $31.4m the previous year.

“The OCD story is about choice, and the value farmers have placed on it,” Talley said.

“Options at the farm gate are important.”

In 2003, Fonterra had 96 per cent of the country’s milk supply after being created from an industry mega-merger. In 2007, when Open Country Dairy was incorporated, Fonterra still controlled more than 90 per cent and today is thought to have more than 80 per cent ofthe raw milk market.

Open Country is also the world’s second-largest global exporter of wholemilk powders – after Fonterra.

Its manufacturing plants in Southland, Taranaki and the Waikato are supplied with milk by about 1000 dairy farmers, who unlike Fonterra’s cooperative farmer owners, don’t have to buy shares to supply.

Open Country’s growth journey hasn’t been plain sailing. It has clashed with Fonterra, the country’s milk price setter, numerous times over its milk pricing methodology and challenged Fonterra and government policy and provisions under the industry’s umbrella legislation, the Dairy Industry Restructuring Act 2001.

Like Fonterra, as it’s expanded and taken on more milk, it’s made headlines for environmental breaches. It’s been successfully prosecuted several times by the Waikato Regional Council for discharges from its Waharoa, near Matamata, site. Last year it was fined a record $221,250 by the court after a 2019 discharge event which caused sickness in the Waharoa community.

Last year, the company commissioned a $20m wastewater treatment plant at Waharoa, and aims to be self-sufficient for water across all sites by next year.

Talleys Group involvement began with a 30 per cent stake in Open Country Cheese, a company founded by Wyatt Creech around 2003 after export deregulation to make cheese at Waharoa.

By 2007, a company called Dairy Trust had been formed, 70 per cent owned by Talleys meat processing company Affco. Dairy Trust bought into Open Country Cheese and the two companies went on to combine to become Open Country Dairy.

Open Country’s headquarters is in Auckland. It has an independent chairman, Aucklandbusinessman and former EMA leader Laurie Margrain.

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