Olam International pours $101m into Uruguay business

And we all thought it was being milked dry.

Olam International’s dairy farming business in Uruguay has not been performing to its potential lately, but the company is not backing down.

Olam International’s wholly owned dairy farming subsidiary New Zealand Farming Systems
Uruguay will invest USD80m to establish a new dairy processing facility in the central region of Uruguay.

According to a report by OSK-DMG, the project will enable Olam to fully integrate its dairy supply chain and realise the full potential of dairy farming operation. The greenfield dairy processing facility will initially have a capacity to process 600,000 litres per day, going up to 1m litres of milk per day and is expected to commence operations in 2017.

It can be recalled that the company had sold and leased back parts of its dairy farm land in April 2014 for gross cash proceed of USD53.7m. OSK-DMG views the current investment of USD80m in dairy processing facility positively, as it is part of Olam’s continuing efforts to restructure the dairy business and improve the margins for this business segment.