Fonterra looks to double Chinese milk production with second farming hub

Wednesday 11th September 2013

Fonterra Cooperative Group, which was embroiled in a false food safety alarm last month, is seeking to double its Chinese milk production in China with plans for a second farming hub in the Shanxi Province.

The world's biggest dairy exporter plans to develop five 3,000-cow farms in Ying County, doubling its Chinese milk production to an annual 300 million litres, the company said in a statement. Fonterra is looking for partners in the development, in the second step towards producing an annual 1 billion litres of milk in China by the end of the decade.

"This is a key part of our strategy to become a more integrated dairy business in China and to contribute to the growth and development of the local Chinese dairy industry," said Kelvin Wickham, Fonterra President of Fonterra Greater China and India. "Having secured the right location in the Shanxi province we are now able to approach potential strategic partners."

Fonterra has been boosting its exposure to Asian markets and China in particular as it looks to cash in on an increasingly wealthy population with growing demand for protein.

The Ying County hub is expected to be in production in the second half of 2014.

Wickham said the Chinese production will help meet growing demand for dairy products in the world's most populous nation.

Last year Fonterra ramped up its investment in China's Hebei Province, signalling it would spend $100 million on adding two more farms in the first of its hubs.

BusinessDesk.co.nz

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