Fonterra has fresh prospect

A new standard that redefines "fresh food" in China will make it easier for foreign milk producers - such as Fonterra - to expand their shares of China's dairy market.

"Domestic pasteurised and UHT milk producers, and Chinese dairy farmers, will lose [out]," said Dou Ming, a senior official in the Dairy Association of China.

Fonterra is ranked No 1 in China's non-fat milkpowder sector (85 per cent share) and in the high calcium market (90 per cent), and is negotiating to buy into China's liquid milk sector.

Mr Dou said last week that a proposed new national standard, due to take effect next October, defined fresh food as "not having been processed".

That meant, in effect, that pasteurised liquid milk would no longer be designated as fresh milk.

The dairy industry is one of the fastest-developing industries in China, with production last year valued at 50.9 billion yuan ($8.6 billion), up 35 per cent year-on-year.

This rapid development has highlighted the division of China's dairy industry into two groups, with its hundreds of local dairy producers pitted against a dozen national dairy firms.

The national brands sell UHT milk, commonly branded as pure milk. The local dairy producers mainly produce pasteurised milk, which must be refrigerated.

- NZPA