China – Fonterra, a leading dairy cooperative owned by New Zealand dairy farmers, is selling its stake in two joint venture (JV) farms in Shandong province, China, to AustAsia Investment Holdings in line with its goals to focus more on production at its home country.
According to a statement from the company, the farms will be sold to Singapore-based AustAsia for US$115.5 million.
Fonterra had a 51% controlling stake in the farms and is expected to receive NZD 88 million ($62.1 million approx.) in sale proceeds.
The move to sell the Chinese JV farms follows a 2019 decision to halt overseas expansion after the dairy was criticized by the more than its 10,000 farmers for its foray into countries like China and value added consumer products that were weighing on its profits.
The sale of the JVs comes a few months after Fonterra completed the sale of its two wholly owned China farming hubs in Shanxi and Hebei provinces in China to Inner Mongolia Youran Dairy in April for NZ$552m (about US$386 million).
“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,” said Fonterra CEO, Miles Hurrell.
“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.”
According to Fonterra, the sale of the JV farms requires no further regulatory approvals. The transaction is expected to be completed on 30 June.
Earlier, Fonterra Australia again revised its average farm gate milk price for the 2021-22 season to $6.95/kg MS, inching its way towards the coveted NZ$7/kg milk solids mark.
Fonterra Australia managing director Rene Dedoncker said the price rise takes the company to the “top end of the forecast range” Fonterra provided when it opened on May 10.
Mr Dedoncker said the price “reflects our commitment to supporting our farmers and paying a competitive milk price”.
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