As possibly the first in a string of investments following the historic free trade agreement signed between Australia and China this week, China’s New Hope is investing $500 million in Australian dairy farms and processing in a deal with ASX-listed Freedom Foods. As a result of the free trade agreement signed between the two countries, Australian dairy producers fared quite will with tariffs of up to 20% on Australian dairy imports to China being eliminated in four to eleven years. Ten years ago China imported $200 million of Australian dairy products per year, today it imports $6 billion worth, and growth continues. Freedom Foods states it is considering collaborating with New Hope on additional branded dairy operations to take Freedom Foods to China’s market. Murray Goulburn, which accounts for 40% of Australia’s total milk pool, plans to raise up to $500 million by listing a unit trust on the ASX next year to raise funds for a possible purchase of a stake in a Chinese dairy entity, or for investment into distribution channels, and Bega Cheese signed a $100 million UHT milk deal with China’s Chingqing General Trading Group in September and states that future additional deals are being discussed.
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