Fonterra looks to invest in China

New Zealand dairy co-operative Fonterra is in negotiations to lease two new farms in China.

The company currently has a farm in Hangu, in Hebei province, which is performing well and producing record levels of milk.
Because of this, Fonterra China managing director Philip Turner believes the time is right for further investment.
With the China dairy market expected to show double-digit annual growth over the next 10 years, the current supply of high-quality fresh milk is struggling to keep up with demand.
Milk safety in China remains a concern after deliberate melamine poisoning of milk supplies caused the deaths of several babies and made thousands of infants ill just two years ago. SanLu, Fonterra’s joint processing venture, was involved in the crisis, along with more than 20 other plants. SanLu was declared bankrupt and Fonterra is no longer involved in processing in China, although the company is expected to announce a new venture soon.
Fonterra’s new farms would be of a similar size and carry around 3,300 milking cows.