Fonterra plans to invest in new Indonesian plant

The plant in Indonesia is expected to be running within 18 months. Photo / File

Fonterra Cooperative Group, the world's biggest dairy exporter, plans to invest in a new blending and packing plant in Indonesia as it seeks to tap growing Asian demand for high-protein food products.

The plant is expected to be running within 18 months, and will pack and blend New Zealand-sourced ingredients for the Anlene, Anmum and Anchor Boneeto consumer brands to be distributed into the Indonesian market.

Chief executive Theo Spierings announced the plan as part of the Prime Minister John Key-led trade missions to Indonesia, which is the 10th-biggest market for Fonterra and New Zealand's 10th-largest export destination.

"With such rapid growth forecast in Indonesia, we want to increase our packing and blending capabilities on the ground to support the long-term growth of our business," Spierings said in a statement.

"While Fonterra's brands will continue to use New Zealand ingredients, the new plant will support more local secondary processing of the products and help us respond to market needs swiftly," he said.

The announcement comes a week after the dairy exporter flagged it would spend $100 million to build two more farms in China, when Fonterra said it wants to produce up to one billion litres of milk a year by 2020 across the world's most populous nation.

Maspiyono Handoyo, president director of Fonterra Brands Indonesia, said the company is looking to work with partners to set up the plant, and is considering its "possible structural options and locations."

The dairy exporter is seeking to attract external investment to pay for its global aspirations with its controversial Trading Among Farmers project - a scheme that would enable farmers to sell the dividend rights of their shares into a fund, which would then become available for investors to purchase as units in a secondary market.