Fonterra, Abbott to develop dairy hub in China

Abbott and Fonterra forming joint venture to invest in dairy farm hub in China that will produce up to 160 million liters of milk annually.

Global health care company Abbott and New Zealand-based Fonterra Co-operative Group Ltd. announced July 10 that they have signed an agreement to develop a proposed dairy farm hub in China. The strategic alliance, which is subject to Chinese regulatory approval, will leverage Fonterra's expertise in dairy nutrition and farming in China and Abbott's continued commitment to business development in China.

Dairy consumption in China has been rising steadily over the past 10 years. The continued development of safe, high-quality milk sources is essential to meeting this growing demand from Chinese consumers. Abbott and Fonterra, through this alliance, will contribute to the growth and development of China's dairy industry.

"This would be Fonterra's third farm hub in China and will complement our existing farming operations in Shanxi and Hebei provinces that have been very successful," Fonterra chief executive Theo Spierings said. "Farming hubs are a key part of our strategy to be a more integrated dairy business in greater China, contribute to the growth and development of the local Chinese dairy industry and help meet local consumers' needs for safe, nutritious dairy products."

"We're pleased to partner with Fonterra, a global leader in dairy science, on this alliance to build dairy capacity in China," said Miles D. White, Abbott chairman and chief executive officer. "This is a very important step in our growing commitment to Chinese consumers."

If approved, Abbott and Fonterra will form a joint venture to invest a combined $300 million into the farm hub, which will contain up to five dairy farms and more than 16,000 dairy milking cattle to produce up to 160 million liters of milk annually. The herd for this hub will comprise animals either imported or sourced from Fonterra's existing farm hubs. All dairy cattle will have genetics traceable to New Zealand, Australia, the U.S. and Europe.

Pending regulatory approval, the first farm is expected to be completed and producing milk in the first half of 2017, and the remaining farms will commence production in 2018.

Farmer-owned Fonterra is the largest processor of milk in the world, producing more than 2 million metric tons of dairy ingredients, value-added dairy ingredients, specialty ingredients and consumer products every year.

Abbott is a global health care company with a portfolio of science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals. In China, Abbott has more than 4,000 employees working in manufacturing, research and development, logistics, sales and marketing.

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