France's Candia signs deal to boost milk sales in China

* Deal aims to widen sales for Candia products in China

* Comes as French milk industry, farmers in crisis

PARIS, July 2 (Reuters) - Milk producer Candia, part of France’s top dairy cooperative Sodiaal, said on Thursday it had signed a deal with state-owned Zhejiang International Business (ZIB) to sell milk in China, targeting sales of 145 million euros ($161 million) by 2020.

The joint venture between Candia and ZIB branch ZJNAC, which imports and exports animal products, will focus on selling Candia-branded UHT milk and baby milk in existing dedicated shops developed with ZIB but also in retail shops and on the Internet, Candia said in a statement.

“This agreement allows us to enlarge the horizon where we can propose our products,” Candia Director General Giampaolo Schiratti told Reuters.

Backed by initial capital of 50 million renminbi (7.3 million euros), it will focus its activities in the region including Greater Shanghai and the Jiangsu and Zhejiang provinces.

Candia, which will have a 10 percent stake in the company, said its targeted sales of around 145 million euros by 2020 by 2020 would allow Sodiaal to market over 40 million litres of French milk per year.

Sodiaal is France’s largest dairy cooperative with 13,200 members and sales of 5.4 billion euros in 2014. Candia processed 1.4 billion litres of milk in 2014 and exported 25 percent.

The Candia-ZJNAC agreement, signed in the southwestern town of Toulouse during a visit to France by Chinese Prime Minister Li Keqiang, comes at a time when the industry is complaining about massive imports, lower exports and a slump in prices.

French lobby Syndilait said milk imports had risen by 49 percent, or nearly 30 million litres, in the first four months of 2015 from the same period last year, mainly from Belgium and Germany. Exports had dropped 7 percent on the previous year.

However, Schiratti, who also heads Syndilait, stressed the Candia-ZJNAC deal would take time to develop.

“It will help in the long run but not solve the (sector’s) short-term crisis,” he said.

European Union milk quotas were scrapped on April 1, creating expansion opportunities for some dairy farmers while threatening the livelihood of others.

Dairy farmers will hold demonstrations throughout France on Thursday to protest against low prices paid to producers.

$1 = 0.9008 euros $1 = 6.2044 Chinese yuan renminbi Reporting by Sybille de La Hamaide, editing by David Evans