July 11, 2014
Fonterra, Abbott to collaborate on dairy farming hub in China


Fonterra Co-operative Group and Abbott have signed an agreement to develop a proposed dairy farming hub in China.
Leveraging Fonterra's expertise in dairy nutrition and farming and Abbott's commitment to business development in China, the two companies have formed a strategic alliance. Both companies have a long history in China with substantial commercial and social investments in the country.
The partnership is subject to Chinese regulatory approval. The two companies will work with Chinese regulators to obtain necessary approvals through the course of the project's development.
If approved, Fonterra and Abbott will form a joint venture and jointly invest US$300 million into the farm hub. The hub will consist of five dairy farms and an inventory of more than 16,000 dairy cattle, which are expected to produce up to 160 million litres of milk annually.
The herd for this hub will comprise cattle imported, or sourced from Fonterra's existing farm hubs. All dairy cattle will have genetics traceable to New Zealand, Australia, US or Europe.
Pending regulatory approval, the first farm is expected to be completed and start production in the first half of 2017, while the remaining farms are expected to commence production in 2018.
"This would be Fonterra's third farm hub in China and will complement our existing farming operations in Shanxi and Hebei Provinces that have been very successful," said Fonterra chief executive, Theo Spierings. "Farming hubs are a key part of our strategy to be a more integrated dairy business in Greater China, contribute to the growth and development of the local Chinese dairy industry and help meet local consumers' needs for safe, nutritious dairy products."
"We're pleased to partner with Fonterra, a global leader in dairy science, on this alliance to build dairy capacity in China," said Miles D. White, chairman and CEO of Abbott. "This is a very important step in our growing commitment to Chinese consumers."
China's dairy consumption has been rising steadily over the past 10 years, while consumers' growing demand is driving the development of high-quality milk sources.