Oat industry eyes up first plant-based milk factory in NZ

The sector wants to capitalise on increasing demand.
The sector wants to capitalise on increasing demand. Photo credit: Getty

By Hugo Cameron for RNZ

Key players in the oat industry want to capitalise on increasing demand, with the country's first plant-based milk factory on the horizon.
The Oat Industry Group, comprised of growers, processors and retailers, met near Gore on Thursday to talk about opportunities for the future of the grain.

Southland's economic development agency thought there was potential for plant-based beverages in the region and formed a company, New Zealand Functional Foods, to commercialise production.

Functional Foods chair Roger Carruthers said once it had secured enough investment, construction on a high-tech plant in Invercargill would get underway.

"The purpose is to really support and develop a new industry in the country," Carruthers said.

"What that'll do to Southland is really to provide an alternative land use, to help support the initiatives around climate change, some of the concerns around soil degradation et cetera."

He said the first focus of the facility was to take advantage of region's oat farming infrastructure, which had been refined over 150 years, but the factory could adapt to process other plants too.

At the field day, Carruthers updated other industry members on the project, with the aim of proving they had the resources and backing to get the processing plant built.

He said the company had secured their cornerstone investment from The Warehouse founder Sir Stephen Tindall's start-up backer, K1W1, and were working on securing further capital to start construction.

Functional Foods aimed to start construction of the plant early this year and hoped to kick off production a year from then.

Artist impression of New Zealand Functional Foods' plant-based milk factory.
Artist impression of New Zealand Functional Foods' plant-based milk factory. Photo credit: Supplied / New Zealand Functional Foods

Oat-milk retailer All Good founder Simon Coley said he looked forward to taking advantage of a locally grown and processed product.

Without a facility designed to make oat-milk in New Zealand, the company had to source it from Sweden, Coley said.

The planned facility in Southland, organised by New Zealand Functional Foods, would provide another option for All Good and contribute to regional development.

"This is a really interesting opportunity given that there's a need to develop primary industry in the region that has higher value. It looks to us like this is the perfect conditions for that," he said.

Coley said Southland produces oats at a level that could allow a move to worldwide trade when the plant opens.

"I think these alternative milks are going to become more and more prevalent in diets around the world," Coley said.

"There's a place for New Zealand to play in that international market. We have the willingness, the growing conditions, the product development experience, and very soon the technology to do that."

Harraways financial controller Donald Benington said the increased popularity of oat-based food alternatives was creating interesting change in the industry - which would be reflected at the field day.

"It's an opportunity for the industry to meet... traditionally it has been growers mainly and Harraways because we've been the final end use for most of the oats, but increasingly oat milk is coming on to the horizon so there'll be more discussion and engagement with that industry now," Benington said.

A large purpose of the group was to keep up with the cultivation of oat varieties suited for different products.

Benington said oat-based foods were coming back into fashion, which was a good sign for the sector.

"It's brilliant because oat is being used for the food that everyone wants. Oat milk in particular appears to have more of a future going forward than the other types of non-dairy milk so that's very encouraging," he said.

"Surprisingly, they've been around for hundreds of years and are really just taking off again now, so that's good."

Southland arable farmer Graeme Gardyne, who was at the field day, said growers were ready to ramp up production but were just waiting for the plant to get up and running.

"We're putting in extra storage ... there is increased area of oats going in now, but the rest of it really needs to wait on them getting the thing over the line," he said.

He said he was glad local retailers were prepared to get stuck into the emerging industry and were looking at entering the export market.

"It's good they've got that willingness and commitment to make that happen," Gardyne said.

Functional Foods said if all went to plan, New Zealand should have locally made oat milk in its fridges by next year.