Fonterra looks to expand milk production in China
August 24th, 2009
Fonterra is forging ahead with its expansion plans in China as it looks to put the SanLu Group scandal behind it and move to take more control of its Chinese supply chain. Its $20.7m Chinese dairy farm – near the city of Tangshan in Hebei province now has 4500 cows and by this time next year, the herd should have been lifted to 6000.
Philip Turner, MD of Fonterra China, says Fonterra has a cow-to-consumer supply chain in NZ uses the world’s best practices and this management expertise has been introduced to the Tangshan operation. The Tangshan dairy farm is 85% owned by Fonterra and Turner says Fonterra has the option to start more dairy farms in co-operation with Chinese partners.
China’s big dairy market posted double-digit annual growth and a demand of 27bn litres of milk – nearly twice Fonterra’s NZ milkflows. The Chinese consumption per-head is still low, “creating huge potential for growth.” He adds “Fonterra sees a clear opportunity for more joint venture farms with best-practice processes. Chinese partners can supply capital while Fonterra has the farm and management experience.”
The NZ company also has two new milk powder products set to hit markets in east and south China: Anlene high-calcium milk powder to help prevent bone-density loss, and Anmum for pregnant women. Fonterra has 5% of China’s dairy market last year, and combined sales of foreign dairy products comprised about 12% of the total, says Turner, who notes China is the world’s most open dairy market.
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