A Chinese-led consortium has bought 79 per cent of Gippsland dairy processor Burra Foods.
Steady hand: Grant Crothers, who is to remain managing director, says market access from the deal will help stabilise the farmgate milk price.
International dairy farming group Inner Mongolia Fuyuan Farming will own the majority share in Burra, an ingredients business at Korumburra, subject to Foreign Investment Review Board approval.
Fuyuan, which produces 162 million litres of milk a year from 11 dairy farms in China, consists of several investors.
The largest is Hong Kong Stock Exchange-listed China Mengniu Dairy, which manufactures and distributes dairy products throughout China. The second largest is banking group Goldman Sachs.
Burra Foods founder and managing director Grant Crothers and Japanese dairy distributor ITOCHU Corporation have maintained a 21 per cent interest in the company.
“It’s a great balance, they are an ingredient company effectively selling milk, as we are,” Mr Crothers said.
“Their largest shareholder is a Hong Kong-listed entity, they are very accountable and have a diverse group of shareholders, including big global dairy companies and, interestingly enough, the Commonwealth Bank of Australia.”
The search for an investor started 12 months ago with an “open book” and received no genuine interest from an Australian party, he said.
Mr Crothers, who will remain managing director, said the market access from the deal would help stabilise the farmgate milk price. “I’ve spent my life paying a premium for farmgate milk and that will continue,” Mr Crothers said.
Stressing it was business as usual for dairy farmer suppliers, Mr Crothers said the investment would allow the business to move into higher-value nutritional powders and infant milk formula.
Burra started 25 years ago and manufactures 60,000 tonnes of product a year, with plans to grow to 100,000 by 2020. It has more than 170 suppliers and collects about 300 million litres of milk a year.
Mr Crothers was confident of approval from FIRB in the next two weeks