Yashili International Holdings, which manufactures and distributes infant milk formula products in China, is the latest Chinese company looking to invest in New Zealand, with plans to build a 1.1 billion yuan ($210 million) processing plant.
The Chaozhou City, Guangdong-based company’s board signed off on a project to set up a manufacturing facility in New Zealand to process up to 52,000 tons of finished and semi-finished products including base milk powder by the second half of next year, according to a statement on the Hong Kong Stock Exchange. Yashili currently sources most of its raw milk from New Zealand.
The company will spend 950 million yuan on acquiring land and building the plant, and a further 150 million yuan as working capital for a New Zealand subsidiary.
The local unit, Yashili New Zealand Dairy Co, was incorporated in July last year according to Companies Office records and has entered into a conditional agreement to buy land where the facility will operate. The acquisition is subject to certain conditions, including approval from the Overseas Investment Office. . .
Last month another Chinese company, Yili, announced plans to buy Oceania Dairy Group’s land and plans for an infant milk processing plant between Glenavy and Waimate in South Canterbury.
Federated Farmers dairy chairperson Willy Leferink said if the factory went ahead it would probably give the local farmers a good opportunity to get the best milk price for their milk.
There would be competition in the region between several companies including Synlait, Fonterra, possibly even Westland Milk.
Leferink said there would be plenty of supply available for a new plant.
Any new start-up company has the right to milk from Fonterra for three years. After that it would need its own supplier contracts.
There was still a “huge expansion” taking place in the dairy industry in that region, with a couple of big irrigation schemes like Hunter Downs and South Waitaki still to come off which would increase the amount of irrigated area down there and could lead to increased milk supply.
Leferink said he did not see “a hell of a lot of stretch” in the supply base until the country reached the maximum number of cows it could sustain in the long-term, and even then cows could produce more milk than they were currently.
“Also New Zealand has got a fantastic reputation when it comes to food safety . . . I dare say second to none . . . and these people are looking for very safe food because the Chinese don’t trust their own food because of the melamine scandal and a couple of other things,” he said. . .
Farmers wanting to supply Fonterra have to buy shares in the co-operative.
Supplying companies like Yili or Yashili could be more attractive for some farmers who don’t want, or don’t have the money, to buy shares.