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June 28, 2021

Fonterra to sell off China JV farms

The New Zealand dairy major says it remains committed to the Chinese market despite its latest disposal there.

New Zealand dairy heavyweight Fonterra said it remains committed to the Chinese market despite it agreeing the sale of its two joint venture farms in the country.

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The farms in Shandong province will be sold to Singapore-based AustAsia Investment Holdings for US$115.5m with the transaction expected to complete by the end of this month.

Fonterra, which owns the farms with a joint venture partner, has a 51% stake in the business and will receive NZD88m (US$62.3m) in total asset sale proceeds.

The sell-off follow the cooperative’s announcement last October that it was selling its two wholly-owned China farming hubs in Shanxi and Hebei provinces to Inner Mongolia Youran Dairy in April for NZD552m.

Fonterra CEO Miles Hurrell said the latest disposals align to its strategy of prioritising New Zealand milk.

“The sale of the JV farms allows us to focus even more on our farmer owners’ milk and follows the sale of our two wholly-owned China farming hubs earlier this year,” he said.

But he added: “Greater China continues to be one of our most important strategic markets. We remain committed to our China business, bringing the goodness of New Zealand milk to Chinese customers in innovative ways and partnering with local Chinese companies to do so.

“We are well placed to continue to grow our business in Greater China,”

Fonterra, the world’s largest dairy exporter, has been criticised by its farmer-shareholders for its overseas ventures.

The dairy group revealed three months ago that it had further reduced its stake in China infant-formula joint venture Beingmate. At one stage it had a 19% share in the venture but in March this was reduced to 2.82% with Fonterra saying it will have exited the JV entirely by the the end of its financial year.

Fonterra described the results of the joint venture as “disappointing”.

Related Companies

Free Whitepaper
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What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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