Freedom Foods signs dairy deal with China’s New Hope Group

Posted by AFN Staff Writers on 19th November 2014
Freedom Foods signs dairy deal with China’s New Hope Group
Freedom Foods signs dairy deal with China’s New Hope Group

Australian food manufacturer Freedom Foods and its major shareholder the Perich Group have announced the signing of a Memorandum of Understanding with China’s agricultural industry giant the New Hope Group.

The Memorandum was signed during the official ceremonies in Canberra while China’s President Xi Jinping and Australia’s Prime Minister Tony Abbott signed the China-Australia Free Trade Agreement. This visit also coincided with a meeting of the Australia Sino Agriculture 100 meeting, which was attended by New Hope Chairman, Mr Liu.

“We are pleased to announce the formal signing of a Memorandum of Understanding between New Hope Group, Perich Group and Freedom Foods Group,” said Rory Macleod, Managing Director of Freedom Foods Group.

Under the Memorandum of Understanding, the parties will co-operate to develop and implement growth in long-term dairy milk supply through establishment of new large scale intensive dairy farms in South East Australia for supply to Freedom Foods Group’s UHT operations and other potential processing operations in Australia including fresh milk.

“Australia has a unique advantage in the supply and manufacture of high quality premium agriculture based foods,” Mr Macleod said. “With increasing demand from markets in China and South East Asia for high quality value added product, Australia through companies such as Freedom Foods Group and Perich Group are well placed to play an important role in the development of this supply chain,” he said.

Mr Macleod said these supply arrangements would compliment sourcing from existing dairy farm supply to ensure the ability to meet long term supply requirements.

He said the arrangements envisaged will provide a “unique” collaborative business model to develop large scale dairy farms under Australian management and ownership. New Hope Group will be a core investor and partner in the operations, while continuing to market and distribute value added dairy products into China through New Hope Dairy.

New Hope Group investment fund to develop Australian activities

New Hope Group has established an investment fund of up to $500 million to be utilised in the development of agricultural and food processing activities in Australia, with a substantial proportion to be invested in dairy farm and processing activities in the longer term.

The proposed arrangements would also provide for acquisition to develop further scale in dairy farm operations.

Management of farm operations under Perich Group

The management of future farm operations will be undertaken by the Perich Group, through a separate farm management services agreement. The Perich Group has extensive history and experience in the operation of large scale dairy operations.

The parties will work together to implement new farm development from 2015.

It is envisaged that Freedom Foods Group will have a strategic investment in the farm investment vehicle, with the majority of equity funds to be contributed by Perich Group, New Hope Group and potentially other strategic investors.

Under the arrangements signed today, Freedom Foods Group and New Hope Dairy have also agreed to build on the existing strategic relationship for supply of UHT dairy milk for export and sale in the China market, through a number of other key initiatives. These include reviewing other processing opportunities in dairy milk including joint collaboration in other strategic branded dairy operations in Australia and overseas markets, and development of a business plan to take existing and/or new products from the Freedom Foods portfolio for sale in China. These initiatives are expected to lead to increased sales and return on funds employed in the longer term.