Joint venture backed

Dairy farming leaders are backing Fonterra expanding its business interests in Russia.

The dairy co-operative is expected to take a 49 per cent stake in a joint venture with Foodline, its main distributor in Russia. Russian media reported that Unifood would produce butter and cheese through the partnership and Fonterra hoped to gain 5 per cent of the Russian market.

Fonterra shareholder and Federated Farmers vice-president Andrew Hoggard said the more market opportunities New Zealand had around the world, the better, in response to NZME reports that Fonterra and the Ministry of Foreign Affairs and Trade denied news of the $30 million deal was intentionally kept quiet.

‘‘We only consume 5 per cent of what we produce and we export 95 per cent of it so we have got to be selling it around the world.’’

While Russia was a big market, there were risks around its political landscape and Hoggard hoped the co-operative had properly carried out due diligence before undertaking the expansion.

‘‘It’s worth pursuing some of these markets,’’ he said.

He expected it would be discussed among shareholders at the next round of farmer meetings following the interim result announcement in March.

Last year, Fonterra invested $11.7m million for a 10 per cent equity stake in Lithuanian dairy company Rokiskio Suris, the largest in the Baltic State country.

Hoggard said he visited Russia two years ago and believed it was a country with which Fonterra could partner.

‘‘If we are looking for milk pools in Europe, these are the places we should be going.’’