The announcement by dairy cooperative Fonterra for further strengthening pharmaceutical-grade lactose has been warmly received by Farm lobby, Federated Farmers.

Lachlan McKenzie, Federated Farmers Dairy Chairman hailed the cooperative for taking such positive measures and expressed, "As a cooperative, this proves Fonterra is not just capable of but is making investments that will benefit its farmer-shareholders and New Zealand as a whole".

Fonterra is paying $53 million to expand its European JV with its 50:50 JV DMV-Fonterra Excipients (DFE) will buy products from FrieslandCampina Domo-Pharma. Fonterra's managing director for ingredients, Andrei Mikhalevsky informed that the transaction is yet to pass regulatory hurdles but it is likely to get completed by March 2010.

The deal would make Fonterra's joint venture the world's biggest player in "fine" lactose business with the total transaction value of $106m. Fonterra produces about 1.3 billion kg of milk solids every season using lactose which is a major ingredient of milk solid.

Mikhalevsky said that both firms would focus on enhancing research and development capabilities by combining their strengths. It would further prove beneficial for the shareholders of both Fonterra and Royal Friesland Campina in addition to customers.