- Australian Dairy Nutritionals Group (AHF) says it’s on track to become Australia’s first producer of organic baby formula
- The first production of Organic A2 Milk powder is expected in July next year, with the baby formula soon to follow
- The company’s Yaringa farm will be transformed to Organic A2 milk production by March 2021
- Additionally, AHF’s organic milk has won the Victorian Overall Milk Champion for its Organic Low-fat milk
- On market close, AHF is up 13.2 per cent and is trading for 7.7 cents per share
Australian Dairy Nutritionals Group (AHF) says it’s on track to become Australia’s first producer of organic baby formula.
The company said construction on building its formula plant is progressing well, despite some hiccups. The plant is being developed at AHF’s Camperdown Dairy Park site, which is 2 kilometres from the existing manufacturing site.
With some delays in final stages of the planning process and COVID-19 restriction delays – work is currently on track and in full swing for the re-installation and commissioning of the plant from January 2021.
Installation and commissioning works are expected to be completed in June next year, with the first production of organic A2 milk powder and baby powder to follow soon after.
How are the farms looking?
Season conditions in South West Victoria, where the company’s five farms are located, is looking promising for the 2021 financial year.
All farms received strong rainfall during winter with mild temperatures. Spring saw frequent rainfalls and sunshine, which saw pasture growth. This will reduce the amount of external feed needed for the drier months.
Additionally, external feed costs have dropped from last years record high prices due to the drought.
All farms, except Drumborg, is located 20 to 30 minutes from the company’s manufacturing sites. AHF is selling Drumborg and it is expected to be sold in the near future. Funds from the farm will be used to pay down almost half of the company’s debt.
Organic A2 milk and baby formula
AHF’s first farm, Yaringa, saw full organic certification in November 2019, with all other farms on track to achieve organic certification next year.
As organic A2 milk is in scarce supply around the globe, Yaringa will be converted to a full organic A2 milk production by March 2021.
“The board believes AHF will be, if not the first, one of the first vertically integrated dairy operations in Australia producing and processing Australian Organic A2 Milk,” the company told the market on Monday.
“AHF’s 100 per cent Australian Organic A2 milk powder is expected to attract a significant price premium compared to standard organic milk powder,” it added.
The company is in a unique position. Many baby formula businesses do not manufacture their formula instead, they opt for outsourcing packing the product. This means the formula is often manufactured by other businesses using overseas products. As a result, the formula can be very old by the time it’s packed into a tin and ready for the supermarket shelves.
AHF’s milk is manufactured at its facility just 20 to 30 mins away from the fresh milk sourced at the farms.
“The board believes that manufacturing our own farm-fresh infant formula from our own Organic A2 Milk will differentiate AHF from other manufacturers, in an estate-grown strategy similar to that of Australian premium wine and olive oil manufacturers,” the company posted.
Camperdown Dairy has won the Victorian Overall Milk Champion for its Organic Low-fat milk. The company says this shows the quality of the milk being produced at AHF’s farms.
This milk is the one which the organic infant formula product will be based on.
On market close, AHF is up 13.2 per cent and is trading for 7.7 cents per share.