The growing middle class in the world’s fastest growing nations is fueling demand and prices for milk. New Zealand’s Fonterra Co-Operative Group Ltd. produces about a third of all internationally traded dairy products. Fonterra is now building a second dairy farm in China and plans to be involved in multiple Chinese farms to meet the demand for safe, healthy milk.
Its strategy faltered during the 2008 contaminated milk scandal, because the New Zealand dairy producer had a 43% stake in one of the companies responsible for the tainted milk. Fonterra wants to help Chinese dairymen back on their feet and simultaneously take advantage of growth opportunities.
India, another key player, has traditionally been self sufficient in dairy, but trends show that their consumption is growing faster than they can produce it.