13 December 2006

1 minute read

Oceania

Such an operation would make the farm about as big as the largest stand-alone New Zealand dairy units. Fonterra said its move was aimed at supplying more quality milk to its Chinese joint venture San Lu and boosting returns from the business.

No figure was given yesterday for how much Fonterra planned to spend. The company said it was discussing land acquisition with Chinese authorities and was looking to start next October. It is expected Fonterra will bear most of the farm's cost.

Milk supply director Barry Harris acknowledged yesterday that the spending on the farm was not part of the co-op's original San Lu strategy.

But he said the investment was not a cleaning-up exercise aimed at dealing with poorer-than-expected milk quality and returns. He said the quality of Chinese milk was no surprise, returns from San Lu were on track and the joint venture could continue to make a profit with current supplies.

Source: The New Zealand Herald