Branded consumer goods and beverages group Clover Industries officially launched the expansion of its long-life-milk production facility in Perseverance, Port Elizabeth, last month. This will enhance the capacity of the factory from an initial 100-million units a year in June 2010 to an estimated capacity of 178-million a year projected for June this year.

The expansion, which forms part of Project Cielo Blu, has relocated the company’s production facilities closer to the milk source. It took 12 months to complete, from February 2012 to February this year.

The roll-out of Project Cielo Blu, which was announced when Clover listed on the JSE in December 2010, is expected to unlock significant supply-chain efficiencies, including reduced transport costs.

“During the company’s successful listing, R500-million in capital was raised, which enabled Clover to embark on various value- enhancing and expansion projects that set a platform for sustain- able growth,” said Clover nonexecutive chairperson Werner Büchner.

To date, Clover has invested R100-million in the Perseverance facility to relocate its ultra-high-temperature- (UHT-) milk production equipment from its Olifantsfontein facilities in Gauteng and to introduce a few additional platforms, enabling the JSE-listed company to reorganise and expand its pro-duction capacity throughout South Africa.

“Owing to the expansion, there is obviously a need to increase warehousing and distribution capacity,” said Büchner.

As a result, warehousing and distribution infrastructure at the facility has been expanded to support growth expectations – particularly on the back of increased UHT production – with Clover investing a further R70-million to construct a 10 000-pallet station warehouse, due for completion in October.

Apart from unlocking supply- chain efficiencies, the larger facility will also produce fresh milk, UHT cream, UHT Tropika, custard and artificial cream and, as with any major expenditure programme, Clover took into account the environmental and social impact of the expansion to reduce the carbon footprint of the company.

It, therefore, implemented new technologies at the Perseverance plant, which resulted in a 27% decrease in water consumption and an energy consumption decrease of 36%, thereby drastically reducing the environmental footprint of the new facility.

Clover production GM Sarel Swanepoel told Engineering News that the engineers who designed the plant had energy and water efficiency in mind when developing the expansion at Perseverance.

The company installed two new sterilisers, with a 16 000 ℓ/h capacity, designed to incorporate a shorter distance from the sterilisers to the filling machines.

In addition, Clover installed three new filling machines to significantly increase capacity at the plant. It also closed down its production plant in Olifantsfontein, Gauteng, and moved three UHT lines to Port Elizabeth and one to its Pinetown facility, in KwaZulu-Natal.

The company also relocated all its UHT by-products, including Danone’s Ultramel Custard, which it manufactures under contract.

Economic Hub
Before implementing Project Cielo Blu, Clover, which is the largest dairy processor in South Africa, was hamstrung by historical legacy constraints owing to former regulations enforced by the Dairy Marketing Board, which prohibited the company from building pro- duction facilities in coastal provinces, excluding KwaZulu-Natal.

Over the last two decades, however, Clover had seen a steady migration of dairy farmers to the coast, where it is more efficient to produce milk. This resulted in a mismatch between the source of raw materials and Clover’s inland facilities.

“We found ourselves with inefficient production facilities in the north of the country. It was, therefore, essential for Clover to relocate production facilities accordingly and, as Clover acquires a quarter of its milk from the Eastern Cape, our location in Port Elizabeth was especially important,” explained Büchner.

Clover considered several locations that met Project Cielo Blu’s investment criteria and found that the Nelson Mandela Bay (NMB) metropolitan municipality’s investment pro- motion initiative, an incentive policy that focuses on the key economic development nodes in the region, offered the most compelling proposition.

“The Eastern Cape has a wealth of untapped natural and human resources. For that reason, we are very proud to have invested in this province,” said Büchner, adding that the expansion at Perseverance created more than 100 jobs, including 17 skilled, 45 semiskilled and 40 unskilled employment opportunities. This has resulted in a total staff complement of more than 550.

Moreover, Büchner confirmed that Clover has spent 711 days on training and skills transfer since 2011, and hoped to further develop these initiatives.

The NMB metropolitan municipality economic develop- ment, tourism and agriculture portfolio chair, Councillor Thando Ngcolomba, lauded the new income streams in the region created by the expansion, adding that Clover’s investments would contribute significantly to the economic growth of the munici- pality and the Eastern Cape province as a whole.

“The agroprocessing sector has been identified by the NMB municipality and its partners as one of the key sectors that will help diversify the local economy, which is mainly dependent on the manufacturing sector,” said Ngcolomba.

He added that, while the sector had been identified as a “potential catalyst for growth and job creation”, it faced several challenges, including the heightened cost of transport and logistics – one of the more significant expenses in agricultural production.

In light of these challenges, Ngcolomba described the munici- pality’s partnership with Clover as “the kind of partnership in action that our country needs to deal with the challenges as highlighted in the National Development Plan”.

Büchner said the expansion, which was completed within the stipulated timeframe and initial capital budget, was proof that when corporate South Africa and government took hands, much-needed socioeconomic development could be implemented to create a sustainable future for all.

Challenges
Büchner acknowledged the challenges currently facing the agriculture sector, including adverse weather conditions and high input costs, which have resulted in a significant increase in the cost of food products, including a 15 c/ℓ increase in Clover’s milk price in the Eastern Cape.

Büchner said Clover was aware of its role in food security. “The populace spends the bulk of its income on food and it is our role to put our products on the shelves at an affordable price to enable the population to have a healthy and balanced diet,” he said.

He added that Clover needed to play a supportive role in agri- culture, which is still a key employment sector in South Africa. Part of this would be to continually monitor input costs at farm level.

“We are, however, upbeat about the future and are working tirelessly to ensure that we bring our iconic branded products to every consumer in South Africa,” he concluded.