Fonterra and Netherlands-based A-ware Food Group have signed
an agreement to develop a cheese plant and dairy ingredients
plant in Heerenveen, in the north of the Netherlands.
A-ware will operate the cheese plant, while Fonterra will
operate the dairy ingredients plant. Construction of both
plants is scheduled for completion late next year.
Cheese will be produced for A-ware's customers in Europe and
the whey and lactose produced will be processed into dairy
ingredients for Fonterra's global customer base.
The investment fitted well with the strategic priorities of
both companies, Fonterra chief executive Theo Spierings said.
Last week, Fonterra announced it would invest more than $100
million in a new UHT (ultra-heat treated, or long-life)
milk-processing plant at its Waitoa site in Waikato, enabling
it to meet growing demand for UHT products in Asia.
Meanwhile, Forsyth Barr has warned Fonterra's share of milk
processing in New Zealand is likely to fall further as new
entrants and existing players increase independent processing
Two Chinese players have applied to the Overseas Investment
Office to build new capacity in South Canterbury and Waikato.
Yashili New Zealand Dairy Co is awaiting Overseas Investment
Office approval to proceed with a $210 million infant milk
formula plant at Pokeno, while Yili plans to spend $214
million establishing an infant formula plant in South
Increasing competition for raw milk would create regional
supply issues for Fonterra and limit its longer-term growth
outlook, Forsyth Barr adviser Haley van Leeuwen said.
A fall in Fonterra's share to below 80% in either island
would trigger a legislated process that could lead to
industry deregulation and increase barriers for new entrants.
The Fonterra Shareholders Fund (FSF) had performed strongly
since listing at $5.50 and was trading above intrinsic value.
Forsyth Barr retained its ''reduce'' recommendation for FSF
with a $6.50 target price.