New Zealand dairy giant Fonterra says it is going to buy a 20 percent stake in Chinese infant food manufacturer Beingmate. Once the partnership is created, the joint venture will buy Fonterra’s Darnum plant in Australia.
The cooperative also announcing plans to spend $555 (NZ) million on plants in New Zealand to increase milk powder production.
New Zealand, the world’s largest dairy exporter already sells a lot of milk powder to China, the deal would give them a better distribution system in the country.
Fonterra also announcing it will maintain its forecasted farm gate milk price of $6 (NZ) per kilogram of milk solids for the 2014/15 season. Despite declining global prices, Co-op chair John Wilson says their longer-term analysis calls for improving prices later this year and into 2015 as global demand grows.
On July 29th Fonterra reduced its forecast farmgate milk price for the 2014/15 season from $7 (NZ) to $6 (NZ) per kilogram of milk solids.
Fonterra is required to consider its Farmgate Milk Price every quarter as a condition of the Dairy Industry Restructuring Act.