Fonterra seeks European joint venture for cheese

Dairy giant Fonterra is in talks with a number of European dairy processors about a joint venture to produce cheese and whey, an Irish media report says.

The Irish Independent reported that Fonterra was in talks with 10 processors, of which at least two had signed letters of interest.

Fonterra's European general manager, Koert Liekelema, said the global footprint of milk from New Zealand would shrink as the co-operative focused more on servicing Asia, which was the fastest growing market in the world, the paper reported.

"The sooner we increase our milk pool to the point that 50 per cent of all our milk is sourced outside of New Zealand the better, because we are short of milk right now," Liekelema said.

Fonterra processed 14.7 billion litres of milk in New Zealand and 6.6 billion litres overseas during the season ended May last year.

"We're going to process local milk and our main focus is on countries with the most potential for expansion post quota in Europe."

Ireland, Britain, Holland, Germany, France and Poland had the most scope to expand, he said. Ireland had the biggest leeway, Liekelema said.

Liekelema said Fonterra was interested in linking with a hard cheese manufacturer that had scale and was willing to invest, the Irish Independent reported.

A spokesman for Fonterra said yesterday: "We've made no secret of the fact that it's looking to ensure that it's got good business models throughout the globe, not just in the emerging markets."