April 9, 2010
 

Chinese dairy investment hindered by New Zealand's dairy giant

The Chinese-controlled Natural Dairy (NZ) Holdings Ltd says its efforts to buy into New Zealand dairy industry have been hampered by Fonterra's guarding stance against Chinese investors.

The spokesman for the Natural Dairy, Bill Ralston, said Fonterra chairman Sir Henry Heyden had urged farmers to take concerns they had about Natural Dairy's plans to the government and the Overseas Investment Office.

Sir Henry on Wednesday (Apr 7) told journalists that global food security fears meant more foreign interests were keen to invest in New Zealand. He added that foreign investment in New Zealand's milk supply would not actually be sustainable.

"Fonterra are clearly worried about the potential competition posed by Natural Dairy's plans and oppose New Zealand farmers gaining a greater choice in who they may supply or sell their farms to," said Ralston.

Dairy companies operating in New Zealand with the support of overseas links include Synlait and its shareholder Mitsui (from Japan); New Zealand Dairies and its shareholder Nutritek (from Russia); Open Country Dairies and its shareholder Olam (from Singapore); Goodman Fielder (from Australia); and Britain's Cadbury.

Ralston said free trade was "a two-way street" and if New Zealand-based dairy interests could take advantage of the China market, Chinese-related investment has a right to put vitally needed capital into New Zealand without impediment from vested interests.

Regarding the planned investment, Natural Dairy was committed to employ an entirely New Zealand workforce, adopt Fonterra benchmarks of price, foreign exchange and production, use "Made in New Zealand" on its products, as well as enforce New Zealand standards of animal welfare and environmental standards, according to Ralston.

Natural Dairy's proposed NZD1.5 billion (US$1.07 billion) investment - including 29 farms previously owned by Crafar, a proposed NZD30 million ($US$21.33 million) UHT factory, and a possible milk powder plant turning out ingredients suited to infant formula - would involve only a small percentage of New Zealand's total dairy farm assets, which were estimated to be worth at least NZD67 billion (US$47.65 billion).

Natural Dairy planned to re-submit The Crafar purchase to the Overseas Investment Office, which involves around 20,000 cows from the national dairy herd of 5.5 million cows.