Investments in Chinese dairy farms

Fonterra of New Zealand is spending US$40m (EUR28.1m) developing a new 40 hectare dairy farm in Yutian County, Hebei province – its third farm in China. The move is the latest by Fonterra to build a fresh milk production and manufacturing capability in the growing Chinese market, which is already a major buyer of dried milk products using New Zealand milk. The farm will increase Fonterra’s overall milk production in China to around 90 million litres or 360 million cups of fresh milk every year. That compares with Fonterra’s current total annual production of 15 billion litres.

In related news, private US equity firm Olympus Capital Holdings Asia says it will lead a group that will invest $45m (EUR32m) for a sizeable minority stake in Chinese milk producer Huaxia Dairy Farm. Olympus Capital will invest $30m in Huaxia Dairy, while European dairy products maker Mueller Milch Management will invest $10m, and existing shareholders will inject $5m. Huaxia Dairy will use the proceeds of the investment to finance capital expenditures and pursue expansion opportunities. Huaxia Dairy, established in 2004, owns and operates dairy farms in China in Sanhe, which is located in the Hebei province in China.