Fonterra abandons plan for Chile venture with Nestle as farmers object

Fonterra abandoned plans for a Chilean joint venture with multi-national food producer Nestle after local farmers complained the group would have too much market power.

The planned merger of Fonterra subsidiary Soprole and Nestle's Chilean liquid and chilled dairy business won't go ahead due to objections, "primarily from local dairy farmer organisations (who) were concerned that this could lead to a concentration of milk purchasing, giving them less options on who they could sell their milk to," Fonterra said in an emailed statement.

Fonterra and Nestle said they have no plans to put in a new bid to Chile's authorities, and the antitrust regulator had already flagged it opposed the deal.

"Soprole already has a very strong position in Chile market and has been posting strong growth in recent years," Fonterra chief executive Andrew Ferrier said in a statement. "The team is now focused on building on that strong foundation."

Fonterra owns almost all of Soprole, which is Chile's biggest consumer dairy business with about one-third of the market.