Fonterra Strives to Increase Milk Production in China

Fonterra has revealed plans to develop a second ‘farming hub’ in Ying County as part of a proposal to produce one billion litres of milk in China by 2020.

The New Zealand dairy cooperative’s plans comprise five 3,000 cow dairy farms, to be in production by this time next year.

Fonterra’s latest addition will join the existing hub in Hebei Province. When both farm hubs become fully operational they will produce 300 million litres of milk per year.

Company directors expect Ying county to offer great opportunity to Fonterra due to its proximity to both animal feed and customers.

Fonterra President of Greater China and India, Kelvin Wickham described the development as part of the company’s aims to ‘become a more integrated dairy business in China’.

He added that Chinese support has come from all governmental levels in the application process.

He stressed that ties within local communities will be important and explained the importance of Fonterra's decision to extend its farmer training programme.

The new programme in Shanxi is a means of supporting new developments by training locals. 

Growing demand for raw milk prompted the investment. Raw milk supply growth has been at around two per cent since 2010 although jumped to nearer eight in recent months.

The farm hub announcement comes only weeks after the whey powder safety scare, a torrid period for the company, which was ended when independent and Fonterra tests returned negative results for botulism causing bacteria.

Further progress came last week with the opening of the world’s biggest milk powder drier at Darfield.

The drier will run 24 hours a day, producing 30 metric tonnes of whole milk powder every hour. Farmers within a 65 kilometre radius will supply the NZ$500 million unit.

Intentions behind the drier are to supply expanding markets, which will be producing powder for 20 different nations including South Asia, China and the Middle East.

News of expansion coincides with a strong start to the growing season which is expected to see a five per cent increase on last season’s production.

Fonterra has been prompted to increase its milk production forecast to 1,541 million kilograms of milk solids.

UK dairy levy board DairyCo reported that favourable production conditions have improved the outlook following the drought.

August deliveries are eight per cent higher than on last year and so far milk production has lifted 3.4 per cent for the season.