WELLINGTON, New Zealand–Fonterra Co-Operative Group Ltd. (FCG.NZ), the world’s biggest dairy exporter, said on Tuesday it plans to set up a second farming hub in China’s Shanxi province and it is looking for strategic partners.
The new hub will include five 3,000-cow farms. The aim is to be in production by the second half of 2014, the dairy giant said. When fully operational, the two hubs will produce around 300 million liters of milk a year. Fonterra aims to produce 1 billion liters of milk in China by 2020. The company’s first hub includes five farms in the Hebei province.
«The second hub builds on our existing investment in Hebei Province and will help us to meet customer and consumer demand for high-quality fresh milk in China,» said Fonterra Greater China and India President Kelvin Wickham.
Mr. Wickham said now that Fonterra has secured the right location, it will look for strategic partners. He gave no details about where it would look for partners or what the investment would be.
The announcement comes on the heels of a recent food safety scare involving Fonterra. In early August the company warned that three batches of one of its dairy products, whey protein concentrate, might contain harmful bacteria, which led to product recalls and countries such as China and Russia banning some of its milk products. While the scare proved to be a false alarm, Fonterra appologized to Chinese consumers, and company officials are currently in China in a bid to ensure the dairy giant’s reputation as a safe supplier.
Source: Â WSJ
