Nestle has signed a deal with the government of Chen Qi for the facility

Nestle has signed a deal with the government of Chen Qi for the facility

Swiss food giant Nestle has signed an agreement with the local government in north China's Inner Mongolia region to build a dairy farm in the area.

A spokesperson for Nestle in China told just-food today (23 May) that Nestle has signed a deal with the government of Chen Qi, a county next to Erguna where Nestle has had a dairy factory for several years.

It is understood Nestle collects fresh milk from some 25,000 farmers and herdsmen on its farm in Erguna to use in its products.

"The agreement is aimed at enhancing our existing relationship in developing the local milk district," the spokesperson said. "Nestle and the local government will work together to build a 2,000-head cow base."

The spokesperson added that the cow base will be "a transitional solution between small and individual farmers and a large modern farm".

"Small farmers can move their cows currently in their backyard to this cow base, which is centrally managed for better hygiene and efficiency."

The farm is expected to complete by 2013. Nestle did not disclose the scale of the investment.

Nestle has dairy plants in the cities of Shuangcheng and Qingdao in addition to its farms in Inner Mongolia. In January, the company announced it would spend JPY2.5bn (US$395m) over the next five years training managers and improving the quality of the milk produced at its Shuangcheng plant.