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Burra Foods managing director Grant Crothers.
A Chinese company will take a majority stake in Australian dairy processor Burra Foods, subject to approval by the foreign investment review board.
In a letter to milk suppliers, obtained by Dairy News, Burra Foods said it will enter into an agreement with Inner Mongolia Fuyan Farming Co Ltd as its majority shareholder. The deal follows a 12 month strategic review, the company says.
"While we received a number of quality proposals and comprehensive offers, interestingly none from an Australian based business, this agreement will best match our key objective of enhancing market access and raising additional capital to fund the continued growth of our Korumburra processing facility."
The majority shareholder in Fuyan is China Mengniu Dairy Co Ltd, a dairy manufacturer and distributor listed on the Hong Kong Stock Exchange. Mengniu is also a key shareholder of the Yashili infant formula plant at Pokeno, south of Auckland.
Burra Foods says Fuyuan's investment follows an extensive due diligence process and meets the objective of investing in the dairy ingredient supply chain while leveraging its deep insight and understanding of the regional food market.
"This capital injection will help us achieve our long-term growth strategy to increase production from the current 60,000MT to 100,000MT per annum by 2020," it says.
Clearly referring to the downgrading of the Murray Goulburn profit forecast, managing director Grant Crothers said "given recent events in the industry," he was "delighted to be able to announce the news".
"The re-capitalisation of Burra gives us the strongest position possible to continue to grow and deliver positive economic benefits to our supply partners and the broader Burra community."
Crothers says the new arrangement will not affect the staffing at Burra and he will continue in his role.
In the wake of the Murray Goulburn announcement, Burra Foods confirmed it will hold its base farmgate milk price, but would likely struggle to pay the Burra Supply Incentive, which can be worth thousands for some suppliers.
Value-added niche plan
Burra Foods is an Australian dairy ingredient processor that for 20 years has made and marketed value-added dairy products to the global food manufacturing market.
It makes natural cheese, fresh milk concentrates, food preparations, specialty milk powders and fresh dairy ingredients.
Its factory in the heart of South Gippsland at Korumburra, southeast Victoria; offices are in Melbourne, Hong Kong and Tokyo.
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