Beston Global Food Company Limited (ASX:BFC) CFO & Acting CEO Darren Flew provides an overview of the business, including its Jervois dairy operations in South Australia, its key lactoferrin expansion project, strategy and outlook.Thanks Clive. And good afternoon everybody. Thanks for taking the time to hear a little bit more about Beston and what we're doing. I am Darren Flew and I am CFO. Currently I'm actually acting as CEO whilst CEO Jon Hicks is on three months leave. What I'd like to do today is perhaps just start with a very quick overview of who we are for those who perhaps don't know who we are. However, I would like to spend more of the time today on our dairy business and talking about lactoferrin and our lactoferrin project in particular.
So in front of you is a quick summary of who we are. We are, as Clive indicated, a dairy, dairy nutraceuticals, and meat processing company based in South Australia. The largest part of our operations is the dairy business. We listed in 2015 with a range of interests: dairy, meat, lobster, water and technology assets. But the focus over the last couple of years has really been on growing out the dairy business. Represents about 90% of our turnover. We've been growing the business in particular... strongly since commissioning the lactoferrin plant at our Jervois site in 2018. And that's a modern current technology lactoferrin plant which provides a great deal of flexibility in how we run and operate the cheese-making operations there. At Jervois we produce whey powder, cream and butter. We also have a cheddar plant at Murray Bridge and we're going to take a few other activities there. The main activity is focused on Jervois and production of mozzarella. We also have a lactoferrin plant at Jervois. We've had an older technology plant. I'll talk some more about this in a minute... at the operation there at Jervois for some time. But we've made a significant investment, talk some more about that in a new modern lactoferrin production facility, which is in the process of being commissioned at the moment, just about finished.
Milk supply for any dairy business is very important. And we source our milk from the dairy operations from the south eastern regions of Australia, mostly South Australian farmers. On the meat side of things, like I said, counts for about 10% of our revenue. And there's plenty of growth we believe in that business over the next few years. It's certainly not an abattoir, it provides meat ingredients, diced meat, producers premium hamburgers and meatballs. And it also produces some retail products that you might find on some supermarket shelves, ready-to-eat lamb shank meals is an example of that. So we have been growing very, very quickly over the last few years. A recent publication has shown that we're one of the fastest growing food and beverage companies in the Asia-Pacific region. So that's nice. We have a lot to do as we continue forward.
So what I wanted to do was to talk a little bit on the next slide about the actual operations that we undertake, how it works, the primary operations at our Jervois facility. And on that basis really understand what drives the value of our business. So at Jervois we have a lactoferrin production facility. It sits at the beginning of our cheese-making process. Milk is received, gathered up from farmers, arrives in trucks every day, processed through the lactoferrin facility. We produce lactoferrin. The milk, prior to processing, is skimmed so cream is separated from the milk before it's processed through the lactoferrin plant. And then the skim and the cream are recombined in controlled portions and enter into the mozzarella production process. We don't use all the cream in the mozzarella production process. So in the dairy side of things, we produce mainly mozzarella, cream and the waste cream is dried and becomes whey powder.
For 150 million litres of milk we would be producing approximately 15 and a half thousand tons of mozzarella, 2.5 million litres of cream for sale, whey powder at around 7200 tons per annum. And importantly, with the new process, 20 tons of lactoferrin per annum. So when you understand that process, the key drivers for value creation for us are a secure milk supply, which we have, the ability to produce and sell lactoferrin and process every litre of milk that we receive through that lactoferrin facility and to produce mozzarella, which is a higher value product for us than the cheddar.
Next slide, please. So, as I've said, we have been growing very quickly and the charts here show just the extent of that growth over the last few years. We commissioned the mozzarella plant in 2018. It has a capacity to process approximately 200 million litres of milk per annum. And for FY '21 we'll receive about 145 million litres of milk, which is up substantially from 111 million in FY '20. And we're targeting 155 million litres of milk for FY '22. As you can see from the chat on the right-hand side, mozzarella production has been growing significantly as we've been successful in growing our customer base, as we've increased milk supply. Lactoferrin production, in the bottom left-hand corner, is coming off a low base from the old plant technology that we have. But for the last part of FY '21, we will have production from the new facilities. It's already beginning to produce a greater than 95% purity lactoferrin which is really important. And we'll hit full run rate of production in June heading into FY '22. So it's very important for us. And I'll talk more about what lactoferrin is in a minute. As a result of those things, you see the significant growth in sales that we've been achieving over the last few years. Hence the recognition as a fast growing organisation.
Next slide, please. So lactoferrin, it's the question that a lot of people ask, it's not recognised very well by many people for what it is. But it is a protein that's found in milk. But importantly, it's a protein that the human body uses in boosting its immune system. It plays a very important role in our immune systems, fighting viruses and bacteria and other anti-fungal properties. That's been well known for quite a long time. And if you have heard of lactoferrin, you've probably heard of that as an additive into infant formula because it supports the development of infants. But it's also a very important... and used in adult applications, particularly in medical, pharmaceutical and other settings. For instance, it's something that cancer patients are often given to help boost their immunity system through treatment cycles.
Demand for lactoferrin has been growing significantly over the last few years. And the forecasts are for continued significant growth. Demand for lactoferrin around the world was around 350 tons per annum in 2019. And UBIK, in their recent report last year, talked about that demand continuing to grow to be over 500 tons per annum by 2023. We certainly agree with that. In fact, we think that with the issues that have been faced by the world in the last 12 to 18 months that we're all aware of, demand for products like lactoferrin, health based products, immune supporting products can only increase. Pricing of lactoferrin is an interesting thing. This is a business to business traded product. It's not a very open market, it's a little bit opaque. But pricing remains strong. And again, we expect and we agree with the type of price estimates that UBIK report identified as ranges of trading a product. And certainly when we've sold product in the past, we've experienced those sorts of prices. So we do see that lactoferrin will continue to be in demand. And for us, it's a product that we can add to our portfolio that will allow us to extract more value per litre of milk that we produce.
Next slide, please. The project that we have underway which is reaching its final stages right now, we expect to be completed in the next few week... had a gestation where we initiated what we called stage one of the project in July '21. What we are installing now is two lactoferrin extraction columns. Stage one was for a single lactoferrin extraction column, but we were awarded a grant from the South Australian government to accelerate stage two, which we had planned to do in sort of '22, '23. And so we installed the columns at the same time, but we're coming online, as I said, shortly. Well, commissioning will be finished shortly, we're actually online and producing now. And so our total capacity of production will be about 25 tons per annum of lactoferrin from 180 million litres of milk throughput. We do expect to be full run rate of production in June '21, heading into FY '22. We expect our first sales of the product to also occur in June '21 from the production that we've delivered through the commissioning process. There is a lot of focus on the physical infrastructure that goes around a project like this, but we have been very lucky and focused on building people capabilities and skills. We made some key appointments with people with appropriate skills, experience to actually run these plants and drive value and to commercialise the product.
Next slide, please. So first half of '21 was very challenging, and we weren't immune from some of the impacts of COVID-19 as others have also experienced both on market side and on supply side. So we're very, very pleased with the progress of the project to date. To be able to work through the supply side issues and have the project commissioning now has been a terrific achievement. So the key things for first half '21, which are continuing into FY '22 is initiation of the lactoferrin expansion project. We disposed of our dairy farms and used the funds to pay down some debt on the balance sheet and to allow the initiation of the lactoferrin project. With that came significant new milk contracts, which allowed the increase in milk supply to 145 million for this year. We've made key appointments. We received the government grant, which allowed us to initiate stage two earlier along with some funding from a capital rise. And so we're very pleased with the progress that we made through what 1H '21 and into FY '22. The box in the bottom right-hand corner... The company was initially established under an external management agreement. Circumstances have evolved over time and the board has agreed for that agreement to be terminated. And that's just subject to a shareholder approval and an upcoming general meeting in a few weeks' time.
Next slide, please. So I'd like to end by just reinforcing the value proposition that we [inaudible 00:13:28] to our shareholders. We are primarily a dairy business. Security of milk is extremely important to the health of our business. And we've established a very strong and reliable milk supply pool, mostly coming from SA. Lactoferrin, a very significant investment in adding value to the business and adding another stream of revenue to allow us to extract more value for every liter of milk that we process. Mozzarella is at the heart of what we do. It's an extremely important product in the process. We have a current state-of-the-art plant commissioned in 2018, as I said. And we've been steadily building market... customers in mozzarella. And as I said, that's a higher value product stream for us than say cheddar. We're focused on building skills. And like I said, we've sold the dairy farms, restructured our balance sheet and are in a much stronger financial position than perhaps we were 18 months ago, 24 months ago. So the coming catalyst for value, completing the commissioning of the lactoferrin plant, [inaudible 00:14:48] which will be in the next few weeks. The AGM on the 28th to determinate the IMA. And you'll see the first sales of lactoferrin coming through shortly.
So with that, I think we'd like to thank you for taking the time to listen. If anybody's got any questions, contact me at the above. For those of you who might be looking for some research on us, MST Financial do provide some research and that can be found on our website.
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