Looking for positves, page-690

CDC has a capacity to process 36M litres of raw milk to produce its dairy products including processed milk. The annual forecast of milk production from its farms is 16.1 M litres. This means that it is operating below 50% capacity.
All what is being produced by CDC is for the local market. The first half results has seen a loss and barring the one off cost, it would appear that the profit for the next half is not going to be in the millions and hence there is a need to operate CDC at full or near full capacity in order to generate decent profits.
Why do companies export their produce? Two reasons come to mind, (a) The local market is saturated with local and some imported products and competition is keen and a small producer like AHF cannot derive the economic benefits of the large producers. (b) The export market offers better prices and the demand is large that the local producers cannot meet the total demand.
If CDC is to operate at full capacity which means that AHF must either increase its herd size by double or purchase raw milk form independent farms. It appears that neither seems to be evident.
The proposed MOU with Lian He, proposes a new plant solely for export and the partner will finance construction. Now, where is the milk for this plant coming from.
The same question can be raised with the proposed partnership with Tiem Me.
While I am in favour of exports, care should be taken to firstly ensure that the party you are planning to partner is the right one and you have control in a number of areas to ensure that the standards of your products are maintained from cow to human consumption and you can meet the requirements of the importing country. AHF should be selling its own brand and their products should be clearly labelled to depict this and the partner must ensure that only its authorised outlets are selling the products.
If on the other hand AHF is happy to run at 50% capacity and sell its products through the Coles. Woolies, Aldi, IGA and Costco outlets , then we are heading no where.
So Directors stop remaining silent and tell us what your intentions are.