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VDL expansion not affected by financial woes

The new owners of Van Diemen's Land Farms dairy company say financial difficulty plaguing a Chinese company it has strong links to is not hampering bold expansion plans.

VDL's owner Moon Lake Investments said its plans, including direct milk exports to China, were still on track - despite no date being set for the flights to start. It was one of Moon Lake's first announcements after it bought VDL, Australia's oldest dairy, last year.

Moon Lake is wholly owned by Chinese businessman Lu Xianfeng.  Mr Lu is the executive chairman and largest shareholder of Chinese company New Material, and had plans to transfer Moon Lake's ownership to the company, but that has hit a stumbling block. New Material, which trades as APlus in Australia, makes sunscreen fabrics and shades.

In February, New Material applied to the Chinese corporate watchdog - China Securities Regulatory Commission (CSRC) - to issue shares in order to raise capital. That involved Mr Lu trying to on-sell Moon Lake to New Material. The commission audited the proposal and examined assets including Moon Lake and blocked the move on the basis of the dairy's "profitability uncertainty".

Moon Lake managing director Sean Shwe said it was a tough time for the whole industry.

"The dairy industry experienced an unprecedented drop in milk price coupled with the drought conditions in Tasmania so most players in the industry didn't make money," he said. 

University of Tasmania senior lecturer in Chinese studies Mark Harrison said the Tasmanian Government needed to strengthen its ties with Chinese business regulators in order to protect Tasmania's interests.

"Liquid milk imports into China are declining, not rising in 2017, in the face of strong competition from domestic dairy producers in China, and the logistics of a fresh product like milk is very complex so the company faces many challenges." 

(From ABC News - 13 July 2017)