China’s dairy cattle numbers have fallen dramatically in the past two years just as its middle-class demand for all dairy products soared. Fonterra’s first dairy hub of five farms and 15,000 NZ-bred cows is reaching full milk production out of Hebei province, surrounding Beijing and Tianjin. A second hub of five farms is under construction in neighbouring Shanxi province, south-west of Beijing, where the first milk is expected later this year.
The current China plan is to produce 1 billion litres of milk annually by 2020, which would take 100,000-plus cows.
Fonterra’s chief executive Theo Spierings is thought to be more gung-ho on China farm development, wanting to lift the target to 2b litres annually, as prices paid for the best quality fresh milk there are the world’s highest.
Spierings recently announced a new stand-alone Fonterra unit called International Farming Ventures (IFV), which overwhelmingly consists of the China farm hub development. Henk Bles, an experienced dairy cattle manager and geneticist, is to be interim managing director for six months while Fonterra recruits his successor.
The announcement of IFV as a separate business unit signals Fonterra’s intention to accelerate the expansion, to leverage NZ’s supply chain expertise, and possibly float that business off in the future.
