Fonterra to develop second China farm

Fonterra chief executive Andrew Ferrier. Photo / Sarah Ivey

Dairy giant Fonterra is planning to have a second Chinese farm up and running in about a year.

The farmer co-operative yesterday said it had agreed with the Government of Yutian County of China to develop a farm in Hebei Province.

Fonterra chief executive Andrew Ferrier said China was an important market and the company was committed to investing in the local industry.

"The fast-growing demand for dairy in China will be met by locally produced milk and we want to be working alongside the local dairy industry to help meet this demand," Ferrier said.

Fonterra said the $42 million investment signalled the next step in a strategy to expand milk production in China following the pilot Tangshan Fonterra Farm.

"The Tangshan Fonterra Farm pilot successfully demonstrated our ability to produce high-quality milk locally," Ferrier said.

"Today's agreement further strengthens Fonterra's capacity to deliver a secure and sustainable supply of fresh dairy products for Chinese customers and consumers."

The free stall farm would be developed on 42 hectares in Yutian County, house about 3000 cows, with 12 barns, a milking parlour and waste water treatment systems.

Fonterra said the cows would be housed inside large barns to protect them from the climate, inside which the animals could roam freely.

Construction would take about a year, with cows imported from New Zealand expected to start milking in November 2011.

Yutian County deputy party secretary Fu Zhenbo said: "Fonterra has a reputation as a leader in farming best practice globally.

"We believe Fonterra's second farm will contribute to building Yutian's reputation as an important agricultural region in Hebei Province."

The new farm would be set up and managed similar to the pilot farm, which now has 6000 cows and produces about 25 million litres of milk.

Fu and Ferrier signed the agreement yesterday at a ceremony in Beijing.