Natural Dairy launches broadside at Fonterra

Wednesday 7th April 2010

Natural Dairy (NZ) Holdings has all but accused Fonterra of promoting xenophobic hysteria over the Hong Kong-based company's plans to invest in the dairy industry.

"Natural Dairy's interest in the New Zealand dairy industry has met a xenophobic response from some farming interests completely at odds with reality," said the company in a three page statement that takes to task Fonterra and its chairman Sir Henry van der Heyden for fanning the flames and offering less to New Zealand farmers than Natural Dairy proposes.

"Fonterra are clearly worried about the potential competition posed by Natural Dairy's plans and oppose New Zealand farmers gaining a greater choice in who they may supply or sell their farms to," said the statement, issued on behalf of Natural Dairy (NZ) and its subsidiary, UBNZ Asset Holdings.

The statement follows a fortnight of increasingly critical coverage about both the bona fides of the primary Chinese promoter, May Wang, and the handling of the Natural Dairy bid for 29 farms covered by the Crafar family dairy empire's receivership.

"While May Wang, who heads the company that is currently purchasing land on behalf of Natural Dairy, has had some previous business difficulties ... Natural Dairy (NZ) Holdings Ltd. is a separate entity backed by reputable large scale investors, primarily from the Asian region.”

UBNZ is seeking Overseas Investment Office permission to buy the farms for around $150 million and Natural Dairy is attempting to raise up to $1.5 billion to invest in more dairy assets and potentially to construct processing plants to produce long-life milk and infant formula in New Zealand for the Chinese market.

Contrary to suggestions from farmers interviewed in the media that the Chinese investors would bring in foreign labour and seek to skirt New Zealand food regulations, "one of the principal reasons Natural Dairy decided to locate here was the benefit implied in have the 'Made in New Zealand' label on its products", the company's statement said.

"Indeed, these standards will be enforced to a higher level on Natural Dairy owned farms as, unlike Fonterra which does not act on mismanagement by farmers of their land or animals, Natural Dairy as owners of the farms has a statutory obligation to do so.

"Unlike Fonterra, Natural Dairy intends to add value to its export milk products. This will add value to the New Zealand economy."

Responding to comments from van der Heyden, who said he was receiving up to 10 calls a day from concerned farmers, Natural Dairy said: "Can Sir Henry explain why Natural Dairy and its solicitors are taking at least 10 calls a day from farmers wishing to sell their farms to Natural Dairy?"

"If Fonterra is not willing to purchase New Zealand dairy farms and it is not willing to help farmers pay their bank debts, why is it opposed to those farmers being able to realise a fair price for their land from company such as Natural Dairy?"

Fonterra did not immediately respond, although when made aware of the statement by BusinessWire, a spokesman's first reaction was: "We haven't said a damn thing about Natural Dairy."

Natural Dairy said reaction in New Zealand was out of proportion to the size of its intentions in the country, which involved up to $1.5 billion in a $67 billion industry, while the Crafar herds totalled 200,000 animals in a national muster of 5.5 million cows.

"This is not a 'Chinese takeover of the New Zealand dairy industry' as some hysterically suggest."

Businesswire.co.nz

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