OREANDA-NEWS. April 19, 2012. New Zealand-based Fonterra, the world's biggest dairy company, Thursday announced plans to develop two new large dairy farms in north China's Hebei province.

Chief executive Theo Spierings made the announcement at the official opening of Fonterra's second farm in China - called Yutian Farm One in Hebei's Yutian County, said a statement from the New Zealand farmer-owned cooperative.

With consumption in China expected to double by 2020, the country would be consuming more than 70 billion liters of milk every year by 2020, Spierings said in the statement.

"It is clear that much of this growth in demand for dairy nutrition will be met from local production," he said.

"An integrated business all starts with a safe, high quality local milk supply. Our intention is to develop separate farming hubs across China, with the ultimate goal of producing up to 1 billion liters of high quality milk every year by 2020."

Fonterra had already committed investment to five farms in Hebei province.

"Our first farm in Tangshan opened in 2007 and today we are celebrating the official opening of our second farm in the area. Yutian Farm One is currently milking around 2,200 cows and producing around 11 million liters a year. At full capacity it will reach 30 million liters of high quality milk a year.

"Construction of our third farm, also at Yutian County, is underway and today we are also announcing that we will be investing NZD 100 million (USD 82.94 million) in a further two farms in the same province.

"This will mean we will have a hub with five farms within the area. Combined, they will have a herd size of around 15,000 milking cows producing 150 million liters a year and all nearby a large market like Beijing.

"We will be using local suppliers, partners and contractors to build our two new farms and when all five farms are up and running we will be employing around 500 local staff to operate them."

Spierings said Fonterra's growth would not be possible without the support of the Yutian County government.

Last month, Fonterra announced it would target emerging markets, with a particular emphasis on China, and drive growth with greater intensity.

The company unveiled a strategy that amounted to more than 100 projects, including many underway, and involved a strong push on the fast-growing emerging markets of China, the ASEAN (Association of South East Asian Nations), Latin America, the Middle East and Africa, where Fonterra already had established businesses.

In March, Fonterra announced an 18-percent increase in its net profit after tax of NZD 346 million in the six months to the end of January, with total sales volume growth of 51 percent and revenue up 7 percent to NZD 10 billion from the same period last year.

Fonterra is the largest processor of milk in the world, producing more than 2 million tons of dairy ingredients and products every year, and employing more than 16,000 people.