Mengniu set up more farms

China Mengniu Dairy said it will invest 3.5 billion yuan ($549.15 million) to set up eight to 12 dairies by 2015 to ensure the quality of its milk supply and rebuild consumer confidence amid tainted milk incidents.

This will allow the group to be able to supply its own fresh milk. At present, 80 percent of its milk is provided by other farms.

Sun Yiping, who came onboard in April as chief executive of Mengniu, decided to fast-track the dairy farm plan, originally dated for completion in 2017.

Of the farms under construction, Mengniu's fully invested subsidiary company Fuyuan Diary will invest 3 to 3.5 billion yuan to build diaries.

Last year, Mengniu's revenue grew 23.5 percent to 37.4 billion yuan.

Setting up dairy farms is on the top of the agenda for many leading dairy producers in China.

Bright Dairy and Food is expected to build a 130-million-yuan-farm in Wuhan, Hubei province.

A 220-million-yuan farm with 5,000 milk cows was launched last month by Inner Mongolia Yili Industrial Group.

Foreign brands also join the trend as Nestlé (China) Ltd set up a dairy farming institute at its Shuangcheng fresh milk supply base early this month. The institute has three training farms, including 10,720 cows.

Dairy companies have also received policy support from central and local governments. For example, a farm that raises more than 1,000 cows in a year will receive 1.5 million yuan as subsidy.