Fonterra is making a second foray into a developing market, announcing plans to establish a pilot dairy farm in India.
Fresh from its plans to build a second dairy farm in China, Fonterra on Friday announced it was targeting India, a market many consider to have the second most economic growth potential in the world.
The dairy co-operative has signed a memorandum of understanding with the Indian Farmers Fertiliser Co-operative (IFFCO) and Global Dairy Health to jointly conduct a feasibility study on dairy farming, the first step towards tapping into India's heavily protected dairy market.
India's The Economic Times newspaper reports IFFCO will have a 45% stake, Fonterra 35% and Global Dairy Health India 20%.
If it proceeds, Fonterra chief executive Andrew Ferrier said it would be of similar scale to those established in China, milking between 3000 and 5000 cows imported from New Zealand and Australia.
The Economic Times reports that will require relaxing three-decade-long rules preventing the importing of commercial cattle.
Fonterra's Tangshan farm, established in China in 2007, is milking 3000 cows and last month Fonterra announced plans for a second farm in Yutian County, Hebei, a 42ha unit where initially 3000 cows will be milked, but with plans to increase that number to 5000, to be housed in free stalls.
The second unit will cost $42 million to build, employ 100 people and be producing milk by November next year.
The Indian investment cements Fonterra's strategy of supplementing product it imports to these growing markets with Fonterra-branded products using local milk but over which it has complete quality control.
Mr Ferrier said IFFCO was the world's largest farmer-owned fertiliser co-operative, with 50 million members and Global Dairy Health was a respected local dairy company.
The feasibility study was expected to be finished soon, with commercial production to begin in July 2012.
