What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The two farms will complete Fonterra's 'hub' of five farms in Hebei Province and are the next step in its strategy to build a fresh local milk supply in China.
The two farms, located 120km east of Beijing on a 80ha double site, will house 3350 milking cows each and collectively produce up to 65 million litres of milk a year once fully operational.
Kelvin Wickham, president of Fonterra Greater China and India said the investment was part of Fonterra's strategy to build an integrated local milk pool in China.
"The demand for dairy in China is expected to double by 2020 and much of this growth will be met from local production. We need to build a safe, sustainable local milk supply to feed this growth," he says.
"Today's announcement completes our first farming hub in Hebei Province. Once fully operational, it is expected to produce around 150 million litres a year. We intend to follow this farming hub with several more through China, with the ultimate goal of producing up to 1 billion litres of high quality milk by 2020."
The double site will operate as two farms, with separate 50 bail parallel milking parlours and cow barns; however they will share common facilities such as workshops, feed mixing areas, effluent treatment and staff accommodation to maximise the efficiency of the operation.
Nicola Morris, general manager of Fonterra China Farms, says the herd will be made up of China-born cows bred on Fonterra's other farms and supplemented by around 4300 cows shipped from New Zealand.
"The right people are critical to the success of our farming operations in China. We will be utilising the great farming and animal husbandry talent that we have developed on our existing farms, to make up the 175-strong workforce we need to employ locally.
"We have a very well established training and development programme across our farming businesses in China which is helping to feed the talent pool needed to manage these farms to Fonterra's high standards."
Construction will start in December 2012 and the farm is expected to open in October 2013.
Zhang Yaowu, Deputy Magistrate of Yutian County who's in charge of agriculture sector welcomed the investment.
"Fonterra's first farming hub is helping to solidify Yutian County's position as a national agricultural demonstration zone. We welcome the impact this will have on our local economy."
