The a2 Milk Company has renewed its exclusive import and distribution agreement with China State Farm Agribusiness Holding Shanghai Co. (CSFA) for five years.
The two companies have partnered since 2013, with CSFA the exclusive import agent for a2’s China label products.
A2 Milk CEO David Bertolussi said he was pleased to see the contract renewed to the end of September 2027.
“The extension of arrangements with China State Farm confirms the strength of our relationship with key partners in China,” Bertolussi said.
CSFA is a wholly owned subsidiary of China national Agriculture Development Group Co. (CNADC), which is the parent company of China Animal Husbandry Group (CAHG). CAHG holds a 25 per cent interest in a2 Milk’s Mataura Valley Milk (MVM) venture.
In August 2020, a2 Milk put in a NZ$270 million offer for MVM for the 75 per cent stake in the dairy nutrition business. CAHG was then the majority shareholder with its 25 per cent interest. The New Zealand regulator approved the acquisition in July 2021.
In FY22, MVM recorded an EBITDA loss of $18.8 million, with the company saying it was due to the current production mix and selling lower value milk powders on the commodity market.
This is a long game for a2 Milk, with the acquisition of 75 per cent of the business providing strategic opportunities to develop nutritional products and more channels into the China market. The goal is to be profitable by FY26.
