Fonterra lining up two more Chinese farms

Photo / Brett Phibbs

Farmer co-operative Fonterra is entering the final stage of due diligence for investing in two more potential dairy farms in China.

The dairy giant said yesterday it had signed an agreement with the government of Yutian County in China, which formalised the final stage of due diligence on the farms.

In February, Fonterra said the two farms would each have about 35ha, 3300 milking cows and create employment and training opportunities for 350 people.

The company has said it would consider partnering on the investment but would want to have full management of the farms.

Fonterra China managing director Philip Turner said the bulk of China's growing demand for dairy would be met by locally produced milk.

"Our first farming operation in China, Tangshan Fonterra Farm, which was established in Hebei Province in 2007, has succeeded in demonstrating that we can produce high-quality milk at good volumes, profitably," Turner said.

"By investing in two more farms, we are building on our commitment to build a safe, secure and sustainable milk supply for our customers in China."

Yutian County is about 115km from Tangshan Fonterra Farm, which Fonterra said was established as a pilot project to test the company's ability to produce New Zealand-standard milk in China.

The farm had more than 5800 cows with, on average, half milking and the imported New Zealand cows well into their third lactation after calving for the third time since their arrival in China.

The farm produced about 25 million litres of milk in the last financial year.