September 23, 2013

China's sovereign wealth fund and Fonterra eye Australia's dairy farming operation

Australian media have reported that state-owned China Investment Corporation and New Zealand dairy giant Fonterra are negotiating to buy Van Diemen's Land Company (VDL), the largest corporate dairy farming operation in Australia under a proposed US$200 million deal.

It is believed the Chinese sovereign wealth fund would buy a 49% stake and Fonterra the remaining 51%. The sale would need to be assessed by the Foreign Investment Review Board as it involves a state-owned company.

VDL owns and operates 25 dairy farms, a Dairy Support Unit and a standalone heifer rearing operation, including replacements. VDL currently runs approximately 30,000 dairy stock.VDL has made several beef-to-dairy farm conversions to improve the profitability of its operations across the 'Woolnorth' property.
 

Last year, VDL announced a $180 million plan to expand its Woolnorth property in the state's north-west. The Tasmanian Farmers and Graziers Association's Jan Davis says the state's farmers could not survive without foreign investment.

VDL is currently owned by New Plymouth District Council (NPDC), based in the Taranaki region of New Zealand.