December 4, 2012

Chinese firms to bid for Western Australia's largest dairy

After the state's largest dairy producer Lactanz Dairies has been put on the market, Chinese companies are among the bidders looking to take a bite out of Western Australia's milk industry.

Lactanz Dairies, a collection of four dairies covering 2,340 hectares in the south-west of the state, is being offered for about AUD30 million dollars (US$31 million), according to an advertisement from Elders Real Estate.

Chinese company Hangzhou Wahaha Group, whose chief executive has expressed his interest in the state's dairy industry in previous interviews with Chinese media, is among the bidders interested in the property, the person said, without disclosing the names of other potential bidders from China. Malaysian and US investors have also expressed an interest, the person said.

Lactanz, which is owned by New Zealand-based company Rosmerta Pty Ltd., is the single biggest producer of milk in Western Australia and supplies close to 90 million litres a year to local dairy company Brownes.

Brownes has a five-year contract to take milk from Lactanz and an option to buy about 3,000 of the milking cows in June of next year, the person said. If Brownes opts to sell the cows, the transaction price for Lactanz would rise to around AUD40 million (US$42 million), he added.

The proposed Lactanz sale comes amid growing signs of Chinese interest in Australia's agriculture sector, which is ideally positioned to export its production to meet Asia's booming food demand.

Last month, Chinese property developer Shanghai Zhongfu Group was named as the preferred developer of a sugar project in the Northern Territories, in a move that has once again stoked political debate on foreign investment in Australia's farmland.