Fonterra

In debate over large scale investments in agriculture in Australia, there are some broader issues about foreign investment that don’t seem to get talked about enough.

Fonterra will develop two new dairy farms in China, increasing to five the number of farms the co-operative has in the country, while, the NZ Government is expected to announce any day whether Shanghai Pengxin can buy the 8000ha Crafar dairy farms.

IP-rich New Zealand is a logical partner for resource-rich Gulf states as a producer of food in places like Africa, says New Zealand's Minister of Foreign Affairs.

Two issues are bound to feature in New Zealand Trade Minister Tim Groser's talks in Beijing next week: New Zealand dairy giant Fonterra’s market power in the China domestic market and Chinese investment intentions within New Zealand.

The Chinese Embassy in Wellington wheeled out a government spokesman today in a rare move, to tell New Zealanders they have nothing to fear from Chinese farmland investments.

Dairy exporter Fonterra is expanding in South America with plans for a pilot dairy farm in Brazil.

The New Zealand dairy giant has signed a deal to buy an 850 hectare farm in the Brazilian state of Goias.

New Zealand's need for overseas capital does not mean giving away control or ownership of farms, says Fonterra chairman.

"What China needs is safe, healthy Chinese milk and it starts all the way up stream with farming," Fonterra's CEO Andrew Ferrier said.

Fonterra today signed an agreement with the Government of Yutian County in China which formalises the final stage of due diligence on two potential Fonterra dairy farm sites.

Fonterra says it is having a "very close look" at relaunching a processing business in China as it faces a rapidly growing competitive threat from Chinese manufacturing startups with their own large-scale dairy farms.

The economic nationalism and calls for protectionism seem ironic given the fact that Fonterra itself is a large multinational, which in addition to having farms in China, has since 2002 been in partnership with global food giant Nestle in the Dairy Partners Americas.