New Zealand-based Synlait Milk and Sydney-headquartered a2 Milk Company (A2MC) have jointly announced a new supply agreement for the production of an infant formula.
The new agreement is for a minimum term of five years for the production of a2 Platinum infant formula by Synlait Milk.
According to the two companies, the agreement renewal has provided certainty surrounding the medium term growth plans while also strengthening their current business relationship.
A2 Milk Company managing director and CEO Geoffrey Babidge said: “We are very pleased to have concluded negotiations in relation to our supply relationship with Synlait. We’ve maintained appropriate flexibility to assess new product and market opportunities as they arise.”
The agreement states that the current production volumes will remain the same.
However, appropriate measures have been taken for increased production of the infant formula production to meet a rise in market demand in the medium term.
Both Synlait and a2MC have been working together since 2010 and claim to be the first in the world to manufacture infant formula from A2 beta-casein protein containing milk.
Synlait managing director and CEO John Penno said: “We’ve assessed our production commitments to all of our customers, including a2MC, and confirmed our ability to continue meeting all production needs into the foreseeable future.
“Our a2 milk suppliers will be pleased with this agreement as they’ve adapted their farm businesses to supply a2 Milk. They create value by differentiating milk behind the farm gate and receive a premium payment to recognise the value they create.
“The term of this agreement with a2MC gives them increased certainty in an uncertain time for the dairy industry.”
As per the agreement, Synlait has committed to supply the prescribed volume of the infant formula (IF) product.
It will also hold exclusive supply rights up to a specified IF product volume while having a right of first offer for certain additional volumes.
On the other hand, A2 Milk Company will be Synlait’s preferred customer. It will also have a committed production capacity and access to latest technologies.
The two companies will jointly work on forecasting demand and supply of a2 Platinum.
