Fonterra has unveiled details of its second large-scale “farm hub” in the country as it pushes ahead with its strategy to produce 1bn litres of milk in China by 2020.

The New Zealand dairy group is moving to develop a safe supply of raw milk in China by investing in opening company-owned farms in the country. The group, which previously opened a facility in Hebei Province, said today (10 September) its second location will be Ying County, Shanxi Province.

The site will be home to 3,000 head of cattle and production is expected to begin in the second half of 2014. Around 500 people will be employed at the facility.

“The second hub builds on our existing investment in Hebei Province and will help us to meet customer and consumer demand for high quality fresh milk in China. Raw milk supply growth in China has been around two per cent over the past three years but demand is growing at around six to eight per cent. So there are significant opportunities for Fonterra to help bridge this supply gap by growing our own domestic milk supply in China and continuing to import our high quality finished dairy products,” president of Fonterra’s operations Greater China and India, Kelvin Wickham, said.

Fonterra is working to rebuild its reputation in China, which was tarnished by the recent recall of whey powder concentrate over fears that it was contaminated with a bacteria that can cause botulism.

Although the scare turned out to be a false alarm, Fonterra launched a high-profile operational review which identified a number of issues that the dairy processor said it is moving to address.

Fonterra’s key findings, released last week, included details of a “one-off lapse in information sharing” that resulted in delays in testing. The company also said the issue should have been brought to CEO level sooner and product tracking took “longer than it should have” due to a major upgrade to computer systems at some of its sites.