Fonterra is continuing its expansion in China with the
purchase of two more big dairy farms in Hebei Province.
The two farms, about 120km east of Beijing on a 80ha double
site, will each house about 3350 cows and collectively
produce up to 65 million litres of milk annually once fully
It had been the dairy co-operative's intention to build a hub
of dairy farms in Hebei Province and the acquisition would
complete that hub.
The investment was part of Fonterra's strategy to build an
integrated local milk pool in China, Fonterra Greater China
and India president Kelvin Wickham said in a statement.
Demand for dairy in China was expected to double by 2020.
Much of that growth would be met from local production.
Once fully operational, the Hebei Province hub was expected
to produce about 150 million litres a year.
Construction will begin next month. The opening is expected
next October. The double site would operate as two farms with
separate 50-bail parallel milking parlours and cow barns.
Common facilities, such as workshops, feed-mixing areas,
effluent treatment and staff accommodation, would be shared
to maximise the efficiency of the operation.
The herd for the two farms would be made up of Chinese-born
cows bred on Fonterra's other farms and supplemented by about
4300 cows shipped from New Zealand.
The farming and animal husbandry skills developed on
Fonterra's existing farms would be used to make up the
175-strong workforce, Fonterra China Farms general manager
Nicola Morris said.
Fonterra intended to develop several more hubs through China,
with the goal of producing up to one billion litres of milk
Despite a 6% increase in China's milk production expected
next year, a recent report from the United States Department
of Agriculture said China's imports of both skim milk powder
and whole milk powder were also expected to grow from last
The USDA expected this year's New Zealand milk production to
decline - but less than 1% - from last year's record level,
Prof William Bailey, of the WesternIllinois University's
department of agriculture, said.
Since the majority of this season's anticipated "decline" was
an expectation of a return to normal weather and resulting
average pasture growth, a summer similar to last year's could
easily push production up to another record, he said.