The SPCA says Fonterra is damaging New Zealand's international clean, green reputation by expanding its use of intensive indoor dairy farming in China.
In the past the dairy co-operative has criticised plans to establish 16 new dairy farms in South Canterbury which would keep 18,000 dairy cows indoors for eight months of the year.
However, it has since confirmed that the system proposed for those farms is identical to what it uses in China.
Fonterra already owns a 6000-cow farm on the outskirts of Beijing and says it plans to develop another two large indoor dairy farms in China as a way of controlling its production chain.
Fonterra China managing director Philip Turner says the pilot farm was established three years ago and the next two farms will be in the same area near Tangshan in Hebei Province.
Leases will be signed early this year with a view to producing milk in 2011, he says.
On Wednesday Fonterra released a statement saying that the farming system proposed for three farms in the Upper Waitaki in South Canterbury is commonly used worldwide, including at its Tangshan farm in China.
But animal welfare groups, including the SPCA, say intensive indoor dairy farming is basically factory farming for cows and is cruel.
SPCA chief executive Robyn Kippenberger says whether the cows are in China or in New Zealand the animal welfare issues are the same.
Ms Kippenberger believes Fonterra's move is destroying New Zealand's reputation as a source of dairy products from substantially pasture-fed cows.
"They're destroying our extensive dairying image overseas. I cannot believe that they would give away that market advantage. The animals aside, that gives us huge kudos in a world market."
Meanwhile, Fonterra says it is still interested in investing in milk processing plants in China, but only if it owns the entire business.
The company was previously a part-owner of the SanLu Group, which was involved in a tainted milk scandal two years ago that killed four infants and made thousands of Chinese children ill.
