Fonterra Cooperative Group [NZX: FCG], the world's biggest dairy exporter, plans to build a third farm hub in China in a US$300 million joint venture with New York Stock Exchange-listed Abbott Laboratories, in its latest attempt to latch on to growth in the world's second biggest economy.
The companies signed an agreement to develop a dairy farm hub, consisting of up to five farms and more than 16,000 cattle, producing up to 160 million litres of milk a year, they said in a statement.
The deal is subject to approval from Chinese regulators, and the initial farm is expected to start producing in the first half of 2017, with full production the following year.
"This would be Fonterra's third farm hub in China and will complement our existing farming operations in Shanxi and Hebei Provinces that have been very successful," Fonterra chief executive Theo Spierings said.
"Farming hubs are a key part of our strategy to be a more integrated dairy business in Greater China, contribute to the growth and development of the local Chinese dairy industry and help meet local consumers' needs for safe, nutritious dairy products."
Last year Auckland-based Fonterra announced plans for its second farming hub in Ying County, Shanxi Province to double its Chinese milk production to 300 million litres a year. Fonterra has been 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.
The deal is the latest Chinese venture for Illinois-based Abbott in a string of investments worth more than US$400 million this year, it said in a separate statement.
Last month Abbott opened a nutritional manufacturing facility in Jiaxing, and it opened two research and development centres in Shanghai earlier this year.