Chinese beverage producer Hangzhou Wahaha may invest more than AU$220M in Western Australia's dairy industry to expand its milk import channels, according to newspaper report

Andrew Rogers

LOS ANGELES , March 23, 2012 (Industry Intelligence) – According to a report by the China Daily newspaper, Chinese beverage producer Hangzhou Wahaha Group Co. may invest in excess of AU$220 million (US$228.56 million) in the Western Australia (WA) dairy industry in order to expand its milk import channels, FarmWeekly reported March 23.

Hangzhou Wahaha Chairman Zong Qinghou said that the company was currently conducting a three-moth survey of local dairy farms in WA with the help of the state government. The company will make a decision based on the survey results, he added.

A spokesperson for the Department of Agriculture and Food (DAFWA) in Western Australia said that attracting investment—whether domestic or international—is key to the long-term development and future success of WA’s agriculture and food sector.

Although the DAFWA admitted to having provided expertise and information to Hangzou Wahaha relating to the company’s potential investment in WA’s dairy sector, the spokesperson indicated that any specific activities or disclosures were commercially confidential.

The DAFW has also hosted delegations from Hangzou Wahaha.

The DAFWA spokesperson noted that WA had excellent water and land resources, and that the expansion could provide new financial returns and jobs for WA in addition to helping meet global demand “for increased food production and food security.”

Mr. Zong indicated that the company could make a decision as early as June in regards to the potential investment, and said that the premier quality and lower price of Austrailia milk is appealing to Hangzou Wahaha.

He noted that the company imported half of its annual consumption of 50,000 tonnes of milk powder, and that the investment in the WA dairy sector and related industry chains would ensure that the company’s supply of milk power remains stable.

While some dairy farmers in WA would welcome Hangzou Wahaha’s investment, others remain skeptical.

Ross Woodhouse, a Scott River dairy farmer, said that the investment could potentially lead to an increase in demand for WA milk, would help producers circumvent pricing games on the part of supermarkets, and could potentially triple the overall milk output in WA.

Miles Mottershead, a Margaret River dairy farmer, said that he was not sure what effects the investment would have on the dairy industry, and remained ambivalent about whether it would be good for the dairy industry as a whole.

The primary source of this article is FarmWeekly, Victoria Park East, Western Australia, on March 23, 2012.

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