FrieslandCampina said lack of arable land in China made it "key" to improve yields

FrieslandCampina said lack of arable land in China made it "key" to improve yields

FrieslandCampina plans to set up a dairy R&D site in China that the Dutch giant claims will work on improving product quality and safety.

The company has signed a deal to team up with the China Agricultural University and Dutch university Wageningen UR to work on the project, which also plans to look the into sustainability of dairy production.

Neither the exact location of the China-based Sino-Dutch Dairy Development Centre nor the date the site would open were disclosed.

However, in a statement, the partners said the centre would spend the first three years studying current production methods in China. They also plan to test the "latest safety and quality systems and technologies into practice" on a model farm.

FrieslandCampina CEO Cees 't Hart said: "China is set to become the world's largest and most important market for dairy. It is therefore important to fully utilise its potential to produce more milk that meets the highest safety and quality standards."

The Chinese government is looking to help strengthen the country's dairy sector amid booming demand for dairy products and after a series of safety scares.

In China, agricultural dairy production has traditionally consisted of small scale farms, who sell raw milk to middle men, who in turn supply Chinese dairies. The complexity of the chain provides room for poor standards or - as it transpired - unscrupulous behaviour, fraud and adulteration.

Dairy production remains dominated by small farms; the five largest dairy farming companies in the country account for just 2.4% of the 18.3m cows in China, a recent report from Frost & Sullivan said.

Progress towards large-scale farming therefore remains a long and rocky path for Chinese agriculture.

Dr KE Bingsheng, president of the China Agricultural University, said: "The establishment of [the site] fits into CAU's ambition to contribute to dairy research and industry development in China by learning from the Dutch experience."

FrieslandCampina was among six infant formula companies fined this summer for fixing prices in China.

The company, plus Danone, Mead Johnson, Abbott Laboratories, Fonterra and Hong Kong-listed Biostime International Holdings, were handed record fines totalling CNY669m.