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Fonterra Increases its Presence in China, Particularly in the Ranch Sector

2018-10-30 09:45 Tuesday

New Zealand dairy giant Fonterra released its latest annual report in September 2018, revealing that the company's  China revenues are 18 billion RMB, accounting for more than 19% of total global revenue. Fonterra's Vice President for China believes that the impressive performance can be attributed to its comprehensive online and offline business layout in China, as well as its investment in China's ranching operations.

dairy giant Fonterra

Thus far, Fonterra has invested and operated seven large-scale farms in China, the largest of which have 17,000 and 14,000 cows respectively. Although the market in 2018 experienced relatively slow growth, Fonterra said that its reduced production was mainly due to improvements in ranching operations, and that it would perform better in the future.

Fonterra has introduced Food Safety Standards from New Zeland to its farms in China, in an effort to improve the overall quality of dairy products. For ranching, Fonterra has adopted the sustainable models which combine  farming and animal husbandry for its ranches om Hebei and Shanxi, and constructed a closed loop system including raw material procurement, breeding production, resource utilization and production. This ecosystem can not only effectively reduce the operating costs of  pastures, but also very conducive to sustainable development. Fonterra will build a new irrigation system in the future that will reduce the amount of fertilizer used and increase the output of crops.

As the new retail trend continues to grow, Fonterra has partnered with Freshhema, Alibaba's supermarket chain, to provide fresh milk daily.

Overall, Fonterra's net income remained negative in 2018. Although the company has not fully extricated itself from its losses at Beingmate, repeated references to its business layout in China in the annual report likely means that the company will accelerate its presence in the Chinese market.

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