Fonterra has set a goal of increasing its milk production in China from its current 300 million liters annually to 1 billion liters of milk annually by 2020. Toward this end, New Zealand-based Fonterra and U.S.-based Abbott have invested a combined $300 million to establish what will be Fonterra’s third dairy ‘farm hub’ in the country. The Abbott healthcare group which is a major presence in China’s infant formula market, has invested $400 million into its Chinese operations, opening a nutritional manufacturing plant in Jiaxing last month and two research centers in Shanghai earlier this year. This latest dairy farm hub, which will be Fonterra’s third in China, will include five farms with a total of 16,000 head of cattle with a capacity to produce 160 million liters of milk per year. The partnership with Abbott is Fonterra’s second foreign deal announced this month. Fonterra has also joined with the UK’s Dairy Crest to market dairy products used to make infant formula. Earlier this week Rabobank emphasized the importance of mergers and acquisitions and joint ventures for large-scale dairy companies to maintain growth in the face of high milk costs and increased competition among branded producers.
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