Chinese Billionaire Xianfeng Lu to Sell Tasmania's Woolnorth Dairy Empire Following Fonterra Contract Loss
Source: The DairyNews
Xianfeng Lu, a prominent Chinese billionaire, has made the decision to offload Woolnorth farming aggregation in Tasmania, one of Australia's largest dairy operations. This strategic move comes in the wake of a significant setback – the loss of a substantial milk supply contract with dairy giant Fonterra earlier this year.
In 2016, Lu acquired the historic Van Diemen’s Land Company, along with its dairy holdings in Circular Head, Tasmania, for a staggering $280 million. At the time, the acquisition marked a significant milestone, as VDL stood as Australia's largest single milk supplier, boasting nearly 18,000 cows and an annual milk solids production of approximately 7.66 million kilograms.
However, the tide turned in February of this year when Fonterra terminated a 25-million-litre milk contract with Van Dairy, citing irreconcilable commercial issues. Subsequently, Van Dairy was compelled to cull 700 cows in response to the contract cancellation.
Expressing his disappointment, Lu announced his decision to list Van Dairy's remaining land assets for sale, anticipating the expiration of their long-term milk supply agreement.
The offering, encompassing 9500 hectares of farmland, including 4207 hectares dedicated to dairy operations, represents a downsized version of the original property. Significant divestments occurred in 2021, with Van Dairy selling off 11 dairy farms totaling approximately 2200 hectares and 5000 cows to Melbourne-based fund manager Prime Value for $62.5 million.
Further reductions followed, including the sale of 6000 hectares of farmland to Angus cattle breeder Tim Roberts-Thomson for $120 million in 2021 and the recent sale of a 700-hectare farm to Prime Value's dairy fund for $15 million.
The remaining Woolnorth assets, facilitated by Tony Maguire and Brad Davies from Nutrien Harcourts, boast extensive infrastructure and a large water entitlement exceeding 10,300 megaliters. Additionally, the successful purchaser will gain access to Van Dairy's remaining livestock and machinery, the Van Diemen’s Land Company name and archives, and grazing leases on two wind farms.
Lu's acquisition of VDL in 2016 was not without controversy, with early attempts to sell his holdings to a Chinese-listed entity and subsequent regulatory hurdles. Moreover, Van Dairy faced environmental challenges, with operating licenses suspended due to effluent system overflow and investigations into worker underpayment.
Despite the challenges, Lu emphasized his contributions to the local community and economy during his ownership tenure, underscoring his commitment to building a successful dairy enterprise in Tasmania.
However, the tide turned in February of this year when Fonterra terminated a 25-million-litre milk contract with Van Dairy, citing irreconcilable commercial issues. Subsequently, Van Dairy was compelled to cull 700 cows in response to the contract cancellation.
Expressing his disappointment, Lu announced his decision to list Van Dairy's remaining land assets for sale, anticipating the expiration of their long-term milk supply agreement.
The offering, encompassing 9500 hectares of farmland, including 4207 hectares dedicated to dairy operations, represents a downsized version of the original property. Significant divestments occurred in 2021, with Van Dairy selling off 11 dairy farms totaling approximately 2200 hectares and 5000 cows to Melbourne-based fund manager Prime Value for $62.5 million.
Further reductions followed, including the sale of 6000 hectares of farmland to Angus cattle breeder Tim Roberts-Thomson for $120 million in 2021 and the recent sale of a 700-hectare farm to Prime Value's dairy fund for $15 million.
The remaining Woolnorth assets, facilitated by Tony Maguire and Brad Davies from Nutrien Harcourts, boast extensive infrastructure and a large water entitlement exceeding 10,300 megaliters. Additionally, the successful purchaser will gain access to Van Dairy's remaining livestock and machinery, the Van Diemen’s Land Company name and archives, and grazing leases on two wind farms.
Lu's acquisition of VDL in 2016 was not without controversy, with early attempts to sell his holdings to a Chinese-listed entity and subsequent regulatory hurdles. Moreover, Van Dairy faced environmental challenges, with operating licenses suspended due to effluent system overflow and investigations into worker underpayment.
Despite the challenges, Lu emphasized his contributions to the local community and economy during his ownership tenure, underscoring his commitment to building a successful dairy enterprise in Tasmania.
