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Three's a charm: Fonterra to open third China farm

Three's a charm: Fonterra to open third China farm
With Chinese demand for milk forecast to triple in the next decade, Fonterra is expanding its footprint in China with a third dairy farm worth $47 million.

Fonterra has announced plans to build its third farm in China

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With Chinese demand for milk forecast to triple in the next decade, Fonterra is expanding its footprint in China with a third dairy farm worth $47 million.

The dairy cooperative is investing RMB260million (US$40 million) in a 40-hectare farm in Hebei Province, which is expected to increase its overall milk production in China to around 90 million litres (or 360 million cups) of fresh milk every year.

Today the company announced it had signed an agreement with the Government of Yutian County, part of its plan to build a hub of farms in the next five years.

County mayor Ji Xinglong says it will support Fonterra's operations in any way it can. 

“Fonterra’s two farms in the region are helping to further build Yutian’s reputation as a key national agriculture demonstration zone."

Today’s announcement of our third farm investment agreement is the next step in our plans to build a hub of farms in Hebei Province in the next five years

Fonterra China's president Philip Turner says it's a strategic move. The company plans to build a hub of farms 

“The demand for milk in China is expected to triple over the next ten years, and much of this demand is for liquid and fresh milk products. Our future in China is underpinned by our ability to grow high-quality local milk production for our customers and by playing a strong role in the development of the local dairy industry.”

A pilot farm project was established in Hangu in 2007. According to Peter Moore, COO of Fonterra International Farming Ventures, this demonstrates the company's ability to produce high-quality local milk profitably.

Moore says good progress has already been made on Fonterra’s second farm in Yutian since signing the investment deal in late 2010.

“We transferred the first 1,140 heifers to Fonterra Yutian Farm in June and we expect another 3000 to be delivered from New Zealand in October 2011. We are on track to start milking in November this year.”

The new free stall farm, Fonterra Yutian Farm Two, will be developed within 130 km of Fonterra’s existing farm in Hangu and within 9km of the first farm in Yutian County. Construction is set to start in November and be completed by late 2012.

Drawing on a similar design to Fonterra Yutian Farm, it will house around 3,200 milking cows, which are expected to produce around 28 million litres of milk per year. The farm will be managed and audited according to Fonterra’s milk production standards and will train and employ around 100 local staff. 

Fonterra will sell milk from the new farm to local and international dairy brands in China.

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