New Zealand Dairy Producer Fonterra Sells Off China Farms

October 4, 2020 Updated: October 5, 2020

New Zealand dairy co-op Fonterra is selling its two farming hubs and a majority stake in another farm in China to local interests for NZ$555 million to pay down its debts.

Fonterra’s two farming hubs in Yutian County, Hebei Province and Ying County, Shanxi Province will be purchased by Inner Mongolia Natural Dairy Co., a subsidiary of China Youran Dairy Group Limited. The sale is pending anti-trust and regulatory approvals in China and is due to be completed within this financial year.

Beijing Sanyuan Venture Capital has separately agreed to buy Fonterra’s 85 percent stake in its Hangu farm for NZ$42 million.

Miles Hurrel, Fonterra’s CEO, said the decision to sell is in line with its strategy to focus on Kiwi products. He also said Fonterra had demonstrated its commitment to the development of China’s dairy industry when it built its farms there in 2012.

“We’ve worked closely with local players, sharing our expertise in farming techniques and animal husbandry, and contributed to the growth of the industry.

“We don’t shy away from the fact that establishing farms from scratch in China has been challenging, but our team has successfully developed productive model farms, supplying high-quality fresh milk to the local consumer market. It’s now time to pass the baton to Youran and Sanyuan to continue the development of these farms,” Hurrel said in a media release on Oct. 5.

Hurrell indicated the sale should not be read as walking away from China.

“China remains one of Fonterra’s most important strategic markets, receiving around a quarter of our production,” he said.

“Selling the farms will allow us to focus even more on strengthening our foodservice, consumer brands and ingredients businesses in China … bringing the goodness of New Zealand milk to Chinese customers in innovative ways.”

Fonterra announced a “back to basics” strategy last year, reducing debt by more than NZ$1 billion last year, and paying a small dividend.

It is New Zealand’s largest company and supplies more than a quarter of the world’s dairy exports.

In August, Fonterra announced the appointment of Teh-han Chow as CEO of Greater China after he helmed the role in an acting capacity since December 2019.

Fonterra confirmed to The Epoch Times that Chow will retain in the role.

A previous version of this article misstated the figure of the Fonterra deal. The Epoch Times regrets the error.

Follow Caden on Twitter: @cadenpearson