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Fonterra spends $100m on more China farms

Fonterra will build two more large-scale dairy farms in China's Hebei province for $100 million.

The dairy giant today opened its second farm in the province and construction of a third is under way.

Its first farm, in Tangshan, opened in 2007.

Fonterra told NBR Online that chief executive Theo Spierings and chairman Sir Henry van der Heyden were not available for interviews because of the time difference with China and because they had meetings.

"Our intention is to develop separate farming hubs across China, with the ultimate goal of producing up to one billion litres of high-quality milk every year by 2020," Mr Spierings says in a press statement.

Fonterra announced last month it will focus "more tightly" on emerging markets, as it posted an 18% rise in first-half profit.

Yutian Farm One, Fonterra's second farm in Hebei province, is milking about 2200 cows and producing 11 million litres of milk a year.

That is expected to almost triple.

All up, the five farms in Hubei province will have a herd of 15,000 milking cows producing about 150 million litres a year.

In a separate announcement today, Fonterra announced it had appointed financial advisors Craigs Investment Partners as the registered volume provider for the launch of Trading Among Farmers in November.

Legislation that would enable Fonterra Cooperative Group’s farmers to trade their shares has passed its first reading and gone to select committee.

More by David Williams

Comments and questions
12

Oh well ...as long as I never have to drink the stuff that'll come out of that place will be all I care about.

But please note - Fonterra dont actually own the land on which the farms are built......important point that.

Not relevant - they do not own land in NZ either. They can run their business with a long term lease. It also means that instead of $100m they might need $200m if they had to buy the land also.

Have a look at a lot of businesses they do not own the land and buildings they operate out of they rent and lease - reduces the capital required.

So suggest we get over it and move on.

Well posted, but the irony is, that a farmer owned company is playing a big part in exporting NZ Farmers nohow and advanced bred animals, to "cheap labour" countries. Their future competitors?? Go figure?

John,

At least Fonterra will own equity in these businesses and operations. Too often in the past NZ has sold its knowledge for a $100 / hour and we then lose the value created to others.

Globally countries are getting into dairying, India, Pakastain, the middle east and China. They will learn somehow either from NZ or others. The important issue in my view is that NZ tries to retain some onwerhsip and not just sell for a quick $ today.

This takes commitment and resolve and finally Fonterra might be showing how this can be done.

I hope you are correct. I can see the reasoning.
But why push it?
From memory, we had an MP Burdon who thought he could do the same with mushrooms!!! I urge to seek out the result of that!
And then there was the "farmer owned "kiwifruit board"?
I sincerely hope you are right.
Cheers

you got it.... domestic market will faulter in years to come as china no longer needs us after our farming IP has been copied over there...

Bloody good show too, when China gives NZ the one finger - courtesy of Fonterra.

Will show New Zealanders the price they pay for being such dumb racists.

Instead of building bridges with the Chinese, New Zealanders go all racist - where were the complaints and uproar when the Germans and French were buying dairy farms?

Down, down, down - suckers.

China will become a net exporter of dairy products probably in the next 20 - 30 years, with or without access to NZ IP.

NZ needs to wake up to this fact, they will also sell the same commodity products as NZ so that does not help NZ unless we look for value add opportunities.

Quality issues will be resolved, just as the Japanese did with their manufacturing post WW II.

So just like the fact that NZ taught Chile how to grow trees and Chile is now a lower cost producer, I suspect China will become that in milk. The opportunity for NZ is to at least own part of the game rather than giving it away.

Should we expect a backlash from the Chinese over this type of foreign investment? Or is it just precious NZ'ders who have an issue against foreign investment?

This is a just a legitimate form of bridery - who owns the land, bet the peasants don't get $$ for it!!

Why is NZ's great white hope, Fonterra, investing in China when there's all that beautiful Crafar farms to buy?

After the Sanlu disaster, Fonterra actually believes it can influence the primary supply chain in China?

Learn from Apple, Fonterra - get the Chinese to own the farms and secure the products - that's how you do it.

Dumb xenophobic kiwis.