Yili says Westland Milk purchase a step towards a 'dairy silk road'

Yili sees Westland as important part of its dairy empire. Photo / File

China's Yili Group said its newly acquired dairy company, Westland Milk, would form part of its "dairy silk road".

Speaking at a function in Auckland last night to mark the finalisation of the $588 million transaction, Yili Group chief executive Jianqiu Zhang said the acquisition was a significant breakthrough for Yili's global expansion.

"In this regard, the acquisition can be seen as a vast dairy bridge crossing the Pacific Ocean, helping the world to share health,'' Zhang said.

Shareholder farmers in the former co-op have now received a cash payment of $3.41 per share, a 10-year guaranteed competitive milk payout, plus guarantees that all milk would be collected.

Zhang said New Zealand's strong dairying tradition, high-quality raw milk and well-regulated industry alongside Yili's access to global resources and markets would strengthen the ties between Asia and the Oceania region.

"We intend to use our global assets of innovation, excellence and quality to create a Dairy Silk Road, linking our two regions on a trade journey that will benefit us all,'' Zhang said.

Yili first invested in New Zealand in 2013 when it bought the Oceania Dairy production facility in Canterbury.

Zhang said Yili had committed to paying competitive farm gate prices at Oceania and now Westland to ensure a continual supply to meet rising global demand for its products.

"Our global vision is to build healthy lives by being the world's most trusted health-food provider,'' Zhang said.

"We are confident our investment here will bring new life to Westland and create better opportunities not only for our employees, the dairy farmers of New Zealand and the Westland community, but for the global dairy industry and New Zealand as well.''

Westland farmer and former Westland Milk director Katie Milne, who is also president of Federated Farmers, said it was a "bittersweet" day for West Coast farmers.

"It's added a bit of liquidity back into our farming system," she told the Herald.

"It's been a tough few years. None of us ever thought we would see the day when the co-op ends, but we have got a good vibrant future now available to us which we did not know we would have had, if we had stayed as we were," she said.

Former chairman Pete Morrison said the deal, which sees Yili absorb Westland's debt and pay farmers on average about $500,000 for their shares, was needed for the survival of the co-op's farmers.

"We needed a competitive payout and we could not deliver it any other way."

"Yili wants to be the best food supplier in the world and I'm confident that they have left a great future for our farmers," he said.

"We don't necessarily have to own the stainless steel (the factories) in order to get a better milk price and to maintain our farms and keep them in the family," Morrison said.

"That would not have been the case if we had not done this," he said.

Inner Mongolia Yili Industrial Group Co Asia's largest dairy producer and one of the largest globally according to the Rabobank Global Dairy Top 20 Report 2018.

In fiscal year 2018, Yili realised about RMB 80 billion gross revenue ($NZ7.58 billion) – an increase of 16.89 per cent from the previous year.