Norco to join dairy industry giant

NORCO is set to team up with one of the world's largest dairy companies.

The Lismore-based dairy co-operative yesterday signed a heads of agreement to align itself with global dairy business Fonterra.

The proposed alliance will follow Norco's acquisition of Parmalat Australia's half share in the Norco/Paul's Milk joint venture in July.

Norco chief executive officer Murray Richardson said the alliance with Fonterra would give Norco 100 per cent ownership of the business, allowing it to access processing margins and increase milk volumes for suppliers.

"The proposed alliance has the potential to enable Norco to expand its business beyond the geographical restrictions inherent in its joint venture agreement with Parmalat," he said.

Mr Richardson said the alliance would see Norco providing manufacturing facilities and supplying milk to Fonterra on a preferred basis. In turn, Fonterra would provide sales, marketing and distribution support to Norco.

"Our franchisees are one of our biggest assets and we've spoken to all of them. We expect they will all maintain, and maybe even grow their business, through the new alliance," he said.

Lismore dairy farmer Alan Graham supported the union.

"Hopefully we'll get a price increase for our milk," he said. "Norco hasn't got any brand names now, so using somebody else's brand names will give us the opportunity to get a better return for our milk."

Mr Graham said he was pleased the new player was Fonterra.

"It's a co-operative which is good," he said. "It means all the money will go back to the farmers rather than those who don't own farms. Plus it's a global player so there's more opportunities."

Fonterra brands managing director Aidan Coleman said the agreement represented tangible support from Fonterra to Norco. He said it provided Fonterra with opportunities to expand its branded milk business in Australia.

The alliance should fill the gap when Norco loses exclusive rights to use Parmalat Australia's Paul's brands for its Paul's milk joint venture next month. While Norco won the initial legal battle for the rights, Parmalat had the decision overturned in a court of appeal.

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