New Zealand dairy co-op Fonterra said today that it will set up a best practice dairy farm in China to provide quality milk for Shijiazhuang SanLu, the Chinese dairy in which it holds a 43 per cent stake.
The company said its farm and production expertise would help SanLu meet increasing demands for high-quality milk and premium nutritional consumer products in China.
"By developing a cow to consumer supply chain in China we will be able to create value for our joint business and improve returns to our respective shareholders,” said Fonterra Milk Supply Director Barry Harris said.
China's dairy industry is expanding rapidly and milk production is expected to increase from 22 billion litres currently to 40 billion litres in seven years' time, added Harris.
"However growth in dairy consumption in China is also very strong. This will mean that while we expect to continue to import milk products from New Zealand, to meet market demand in China we also need to be producing high quality locally produced milk."
Fonterra said it is currently talking to local government authorities in China about securing land for the farming operation. It plans to milk up to 3000 cows with production scheduled to start in October 2007.
China is the fastest growing dairy market in the world and has attracted several international dairies. Fonterra bought its stake in SanLu last year. The dairy is among the top four in China.
New Zealand is the biggest exporter of dairy products to China.
