In a significant development on Monday, New Zealand’s Fonterra said, it has agreed to sells its farms in China for a total of $367.97 million. Fonterra termed the move, marking a decoupling from China, as one aimed at reducing its debt and shifting its focus to the domestic market.
The development comes in the wake of more than 10,000 local farmers urging the company, in 2019, to halt overseas expansion plan and instead add more value to its domestic consumer products.
“For the last 18 months, we have been reviewing every part of the business to ensure our assets and investments meet the needs of the Co-op today,” said Miles Hurrell, Fonterra’s CEO. “Selling the farms is in line with our decision to focus on our New Zealand farmers’ milk.”
Following the sale, Fontana will be in a position to better prioritize its efforts in the food service, consumer and ingredients business in China, its biggest market, said Hurrell.
China Youran Dairy Group will purchase two farming-hubs located in Ying and Yutian for NZ$513 million, while Beijing Sanyuan Venture Capital is set to acquire an 85% stake in the Hangu farm.
The New Zealand dairy giant said, it will use cash proceeds from the sale to trim its debt, which the company had already managed to reduce by NZ$1 billion, as of September 30, 2020.