News Fonterra
Fonterra waives Chinese dairy farms
Fonterra has announced that it will sell its Chinese dairy farms. The sale will earn the New Zealand dairy cooperative $550 million (NZ dollar). The proceeds will be used by the dairy processor to pay off debt, as part of its announced debt reduction program.
The sale involves a total sum of $550 million. This is partly due to the sale of the agricultural hubs in Ying and Yutian to Inner Mongolia Natural Dairy worth $513 million. On the other hand, Fonterra is selling its 85% stake in Hangu farm to Beijing Sanyuan Venture Capital (Sanyuan) for $42 million. Sanyuan already owned the remaining 15% and has indicated that it is also interested in the remaining part.
Strategy
CEO Miles Hurrell says that this development is in line with the strategy that Fonterra has drawn up. “We have worked closely with local players, shared our expertise in agricultural techniques and animal husbandry and contributed to the growth of the industry. After carefully monitoring the companies and preparing them for takeover, it is now time to pass the baton. to Youran and Sunyuan so that they can continue the development of these companies," said Hurrell. With the decision, Fonterra once again refutes the focus on the milk of its own New Zealand dairy farmers.
China as a sales market
The sale does not mean that Fonterra is completely withdrawing from Asia. China is still an important market for the New Zealand processor, as the country takes about a quarter of the total production. By selling the farms, Fonterra can focus on strengthening the foodservice, consumer brands and ingredient activities in China, according to Hurrell.
Jorine Cosse
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