13 May 2011

Fonterra to start farming in Brazil

4:14 am on 13 May 2011

Fonterra is in the final stages of plans to start a pilot farm in Brazil.

An 850-hectare farm is being purchased in Goias State in the mid-west, where Fonterra plans to farm 3300 cows to produce milk by late 2014. It expects to conclude the sale in June.

Fonterra chief executive Andrew Ferrier says there is increasing demand in Brazil, which has a population of 200 million, for fresh dairy products.

Mr Ferrier says New Zealand milk is still a top priority, but the company is looking overseas to ensure that future global demand is met.

The company sourced 6.6 billion litres of milk offshore last year, about 31% of its total production.

Fonterra is also developing dairy farms in China and potentially in India.

Stronger presence

The Fonterra Shareholders Council says that having a dairy farm based in Brazil will give Fonterra a stronger presence in South America.

Chairman Simon Couper says there is always caution when an investment is made. He presumes Fonterra has done its homework and will be watching for results.

Mr Couper says the board will have to justify to shareholders that they are getting a return on the investment and that it fits with the company's strategy.