DFA and Chinese dairy Yili to establish US milk powder JV

13-Nov-2014 - Last updated on 13-Nov-2014 at 13:05 GMT

Dairy Farmers of America (DFA) and Chinese processor Inner Mongolia Yili have agreed to form a joint venture in the US to produce milk powder.

Yili, China's largest dairy manufacturer, announced in a Shanghai Stock Exchange (SSE) filing yesterday that its board of directors had unanimously approved a proposed joint venture with DFA.

Under the deal, Yili and DFA will establish a milk powder plant in Kansas with an annual production capacity of 80,000 tonnes.

In July 2013, Yili and DFA signed a memorandum of understanding (MOU) with a view to establishing a long-term strategic partnership.

In a statement sent to DairyReporter.com, DFA, said it was thrilled "to continue to strengthen its relationship with Yili."

“When we entered into a strategic partnership nearly two years ago, we were certain we would find ways to work together to maximize value for both organisations," said Rick Smith, president and CEO, DFA.

“Today, we have committed to a historic initiative to bring DFA and Yili even closer together. We are excited about the potential and the significance of this partnership as Yili joins us and our dairy farmers in the development of a state-of-the-art dairy ingredients plant in the United States," he said.

US$1000m (€80.3m) will initially be ploughed into the joint venture, Yili's SSE filing said.

DFA, the largest dairy processor in the US, will stump up US$70m (€42.8m) in capital, and consequently control a 70% stake in the milk powder joint venture.

Yili will invest US$30m (€24.1m) in exchange for the remaining 30% shareholding, it added.