WELLINGTON, July 2 New Zealand's Fonterra Dairy
Co-operative plans to procure a key ingredient used in
infant milk formula from Britain's Dairy Crest, a person
familiar with the matter said, in a move that will allow it to
cut production of low-margin cheese.
The agreement to purchase demineralised whey will also help
the world's largest dairy exporter boost infant formula
shipments to China after it was banned from exporting whey
products there in the wake of a food safety scare last year.
An agreement will be announced later this week, the person
A Fonterra spokesman declined to comment.
Fonterra is keen to reduce its output of natural cheese,
which has been less profitable due to record-high raw milk
prices, but the world's largest dairy exporter needs large
quantities of demineralised whey, a byproduct of cheese-making,
for infant formula.
The deal with Dairy Crest would be the latest effort by
Fonterra to look to other companies to source whey. It has
another tie-up with Netherlands-based A-ware Food Group to
process whey powder from the Dutch company's cheese
The farmer-owned co-op controls roughly a third of global
dairy exports, mainly in bulk ingredients such as milk powder.
But it has been shifting production to higher margin products
including bulk and branded milk formula.
(Reporting by Naomi Tajitsu; Editing by Edwina Gibbs)