Fonterra to Expand Dairy Farm in China

The new free stall dairy farm, Fonterra Yutian Farm Two, will be developed on 611 mu of land (40.75 hectares) in Yutian County of Tangshan City, which is within 130 km of Fonterra’s existing farm in Hangu and within 9km of the first farm in Yutian County.

Jul 19 2011 --- Fonterra announced it has signed an agreement with the Government of Yutian County of China to develop a new dairy farm in Yutian County, Hebei Province. The RMB260million (US$40 million) investment is Fonterra’s third dairy farm in China and is the next step in its strategy to build a high-quality, sustainable fresh milk supply for customers in China.

The 40-hectare farm is expected to increase Fonterra’s overall milk production in China to around 90 million litres or 360 million cups of fresh milk every year.

Philip Turner, President of Fonterra China, said: “The demand for milk in China is expected to triple over the next ten years, and much of this demand is for liquid and fresh milk products. Our future in China is underpinned by our ability to grow high-quality local milk production for our customers and by playing a strong role in the development of the local dairy industry.”

Peter Moore, Chief Operating Officer of Fonterra International Farming Ventures added: “Our pilot farm project, established in Hangu in 2007, demonstrated we can successfully produce high quality local milk profitably. The construction of our second farm in Yutian County is also progressing well. Today’s announcement of our third farm investment agreement is the next step in our plans to build a hub of farms in Hebei Province in the next five years.”

Mr Moore added Fonterra appreciated the support it had received from the local government of Yutian County and Tangshan City for these developments.

Ji Xinglong, County Mayor Yutian County said: “Fonterra’s two farms in the region are helping to further build Yutian’s reputation as a key national agriculture demonstration zone. We welcome the investment in the area and will support them in any way we can to ensure they have the right environment for their operations.”

The new free stall dairy farm, Fonterra Yutian Farm Two, will be developed on 611 mu of land (40.75 hectares) in Yutian County of Tangshan City, which is within 130 km of Fonterra’s existing farm in Hangu and within 9km of the first farm in Yutian County. Drawing on a similar design to Fonterra Yutian Farm, the new farm will house around 3,200 milking cows, which are expected to produce around 28 million litres of milk per year. The farm will be managed and audited according to Fonterra’s Standards of Excellence for milk production and will train and employ around 100 local staff. Farm construction will start in November 2011 and is expected to be completed by late 2012.

Mr Moore said good progress has already been made on Fonterra’s first farm in Yutian, since signing the investment agreement in late 2010.

“We transferred the first 1,140 heifers to Fonterra Yutian Farm in June and we expect another 3000 to be delivered from New Zealand in October 2011. We are on track to start milking in November this year.”

Fonterra will sell high quality milk from the new farm to leading local and international dairy brands in China.