'Right time' for sale of China farms says Fonterra CFO Marc Rivers

Photo / File

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Fonterra has agreed to sell its China farms for a total of $555 million to Inner Mongolia Natural Dairy Company, a subsidiary of China Youran Dairy Group.

Separately, Fonterra said it had agreed to sell its 85 per cent interest in its Hangu farm to Beijing Sanyuan Venture Capital Co for $42m.

Fonterra chief financial officer Marc Rivers said it was "the right time for us to be selling the farms."

"We've successfully developed them, alongside our local partners, and by doing that we've demonstrated our commitment to the Chinese dairy industry," Rivers told The Country Sport Breakfast's Lee Piper.

"We've reached the stage now where it's time to pass the baton over to Youran and Sanyuan and let them continue to develop the farms."

Fonterra chief financial office Marc Rivers. Photo / Dean Purcell

China was one of Fonterra's most important strategic markets, Rivers said.

"About a quarter of our milk ends up there and so we're really excited to continue to grow what's really is an excellent business for us in China."

The sale was in-line with Fonterra's strategy to "prioritise our farmer's New Zealand milk", Rivers said.

Kiwi farmers produced "some of the best milk in the world" and the focus would now be on how to advance the dairy category in China through innovation and sharing expertise, Rivers said.

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"We've been operating in China, really for decades, and over that time the business has evolved - every day we're bringing the goodness of New Zealand milk to Chinese consumers in lots of different ways."

Creating new innovative products and applications was key to keeping pace with the fast-moving market, Rivers said.

One such innovation was Fonterra's new Anchor plant-based milk bottle, which was made from sugar cane. It would be available in the North Island early next week, Rivers said.

"It's New Zealand's first plant-based milk bottle and it's 100 per cent kerbside recyclable, which aligns with the co-op's commitment to have all packaging that we use reusable, recyclable or compostable by 2025."

Sustainability was important to Kiwis and Fonterra wanted to offer consumers an option to make change for good, and to purchase a product that comes in more sustainable packaging, Rivers said.